Prediction: This artificial intelligence (AI) semiconductor stock will join Nvidia, Microsoft, Apple, Alphabet, and Amazon in the $2 trillion club by 2028. (Hint: Not Broadcom)

The artificial intelligence revolution is not just a technological marvel; it's a colossal economic opportunity, reshaping industries and minting new market titans. As companies pour hundreds of billions into building the infrastructure that powers AI, a critical question emerges for astute investors: which underlying power players are truly poised to join the exclusive $2 trillion valuation club, and are they hiding in plain sight?

Navigating the AI Infrastructure Gold Rush

The estimates are staggering: $375 billion flowing into AI infrastructure this year, surging to $500 billion next. The lion's share of this spending funnels directly into semiconductors. While Nvidia has rightfully earned its spotlight as the dominant force with its best-in-class GPUs for AI training and inference, it's crucial to look beyond the obvious leaders to identify the foundational components of this boom.

Broadcom, for instance, has seen its stock price skyrocket, nearing a $1.4 trillion market cap. It plays a significant role through custom AI chips and essential networking components that ensure seamless data flow within data centers. Their AI revenue growth is undeniable, climbing 46% year-over-year last quarter and projected to accelerate further. But does its current valuation align with its broader business trajectory?

Broadcom's Growth Story: A Closer Look

Broadcom's AI semiconductor segment is a powerhouse, set to account for roughly 30% of its sales. Furthermore, its acquisition of VMware has proven successful, driving double-digit growth in annual recurring revenue as customers migrate to its cloud foundation. These are strong tailwinds for the company.

However, an investor's focus must extend beyond individual segment performance to the whole picture. Despite impressive AI and software growth, Broadcom's overall top-line revenue expands at approximately 20% annually. With its stock trading at a forward price-to-earnings (P/E) ratio of 45, a premium valuation implies expectations for exceptionally high, broad-based growth that its current financials, while strong, might struggle to fully justify. This suggests that while Broadcom is participating robustly in the AI wave, its stock price may already reflect much of this success.

Taiwan Semiconductor Manufacturing: The Indispensable Foundation

Here lies a less frequently heralded, yet utterly indispensable, player: Taiwan Semiconductor Manufacturing (TSMC). This is the company that actually fabricates the most advanced semiconductors designed by industry giants like Nvidia and Broadcom. Without TSMC's cutting-edge foundries, the sophisticated chips powering the AI revolution simply wouldn't exist.

Maintaining a Virtuous Cycle of Innovation

TSMC commands more than two-thirds of the global semiconductor manufacturing market, a position solidified by a powerful virtuous cycle. Its technological leadership attracts the biggest design contracts, generating capital for massive investments in capacity expansion and next-generation research and development. This continuous innovation ensures TSMC maintains its lead, perpetuating its critical role in the industry.

Unprecedented Pricing Power and Growth

The demand for TSMC's advanced manufacturing capabilities grants it significant pricing power. Its upcoming N2 process node, for example, is expected to command an unprecedented 66% premium per silicon wafer over the previous generation. This ability to capture higher margins, even as it navigates the complex ramp-up of new technologies, positions TSMC to maintain robust profitability.

Management anticipates AI-related revenue to average mid-40% annual growth through 2029, contributing to an overall revenue growth of around 20% for the business. This consistent, high-quality growth, driven by its pivotal role in the AI supply chain, stands in stark contrast to its valuation.

A Compelling Valuation

Unlike Broadcom, TSMC trades at a more modest forward P/E multiple of 24. For a company projected to deliver operating earnings growth exceeding 20% annually, underpinned by an unassailable market position, this valuation presents a compelling opportunity. If TSMC sustains this earnings growth and multiple, its path to the $2 trillion club by 2028 appears not just plausible, but highly probable.

Invest in the True Enablers of AI

The pursuit of the next $2 trillion company demands more than chasing headline-grabbing growth; it requires a deep understanding of market fundamentals, competitive advantages, and sensible valuations. While many companies will benefit from the AI boom, those that provide the indispensable infrastructure, maintain a technological moat, and trade at a reasonable price offer a more resilient and potentially more rewarding long-term investment. Consider looking at the companies that don't just ride the wave, but create it.