Tech stocks have been some of the most lucrative investments in the stock market in recent decades. Along the way, we’ve seen valuations soar, industries disrupted, and many happy (and well-paid) investors.
No matter how fast recent developments may seem, most of these successes have been decades in the making and are not overnight miracles. That’s why the importance of patience when investing cannot be overstated.
For investors looking for tech stocks to own for the next 10 years, apple (AAPL -0.57%) and Taiwan semiconductor manufacturing company (TSM 7.00%) (also known as TSMC) is an option you don’t have to think twice about.
1. Apple
Apple held the title of the world’s most valuable publicly traded company for some time; microsoft I passed it on recently. Unlike many other big tech stocks that have soared over the last year, Apple’s share price growth has been slower. Still, Apple’s “laggard” is that it’s up 22% over the past 12 months.
Investors are worried about Apple’s slowing sales growth (particularly for the iPhone), but that puts too much emphasis on cyclical issues. Although smartphone sales are in decline overall, the sector is poised to correct itself soon.
This is a downturn for Apple, but when you think of companies you can safely buy and hold for the next 10 years, Apple is at the top of the list. it is innovative and world class CEOand with seemingly countless billions of dollars in cash readily available, they actually have a bank account that can sustain them no matter what economic conditions happen.
The recently released Vision Pro is Apple’s first truly new consumer hardware product since 2015’s Apple Watch. This is a red flag for some who question Apple’s ability to continue to innovate at past levels, but it makes sense for a company that has prioritized expanding its services. Footprints.
Apple’s services ecosystem provides more stable and higher-margin revenue. This helps offset some of the cyclicality in Apple’s hardware revenue.
AAPL Earnings (Quarterly) Data by YCharts.
It’s hard to imagine that 10 years from now, Apple won’t be a more important player in the world. finance and the healthcare industry. From Apple Pay to Apple Card to Apple Watch to Apple Fitness, Apple has been slowly but surely getting its foot in the door.
These could be big growth areas for Apple, and investors will be happy to help support the effort.
2. Taiwan Semiconductor Manufacturing Company
TSMC is one of the most important companies in the technology ecosystem and has been for quite some time. Manufacturer of TSMC semiconductor It provides computing power to some of the world’s most prominent technologies on behalf of many other chip companies.
TSMC’s business can be cyclical. When electronic devices such as smartphones, computers, and game consoles sell well, the demand for chips increases. When consumers cut back on spending, businesses are less likely to order large quantities of chips.
Smartphone chips account for the majority (43%) of TSMC’s revenue, so the recent industry slowdown has affected the company’s bottom line. Although sales in the fourth quarter were down 1.5% year-on-year, this does not change the company’s long-term outlook.
TSM Revenue (Quarterly YoY Growth) data from YCharts.
TSMC is one of the many large companies in the semiconductor industry. Some of our main competitors include: intel, Qualcommand broadcom. However, if you look at the number of top companies that use TSMC as a trusted source, it is clear that their chips are not competitive in terms of quality compared to TSMC’s chips. TSMC provides the best quality and scale, which is essential for his TSMC customers such as Apple. Nvidiaand teslahigh performance and reliability are required.
TSMC has many patents. competitive advantage To maintain our position as an industry leader. The advent of AI should allow TSMC to leverage AI even further, as many companies seek TSMC’s chips to power their data centers and other technologies essential to AI training and development.
TSMC’s role in the technology ecosystem stands to grow over the next decade. It’s safe to own stocks.
Stefon Walters has held positions at Apple and Microsoft. The Motley Fool has positions in and recommends Apple, Microsoft, Nvidia, Qualcomm, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends Broadcom and Intel and recommends the following options: A long January 2023 $57.50 call on Intel, a long January 2025 $45 call on Intel, and a short February 2024 $47 call on Intel. The Motley Fool has a disclosure policy.