Now, I’m pretty happy with the shares in my portfolio — many are soaring. However, I decided to ask ChatGPT for 10 ‘world-class’ growth shares (to hold for at least 10 years) to see if it could improve my portfolio. Here’s what it came up with…

ChatGPT’s picks

The 10 growth shares listed were:

• Microsoft
• Nvidia
• Alphabet
• Amazon
• Taiwan Semiconductor (NYSE: TSM)
• Chipotle
• Tyler Tech
• SAP
• BAE Systems
• Autodesk

There are some well-known names on that list. However, there are also some more obscure picks such as Tyler Technologies (it does government software) and Autodesk (software for designing things).

Note that ChatGPT told me it offered a diversified selection of stocks. Eight out of the 10 are in the Technology sector though so there’s not a lot of diversification to be honest.

Not for me

Now, I already own the first four stocks. So these picks aren’t much use to me. So what about the other six? Could they boost my portfolio?

Well, I’m going to rule BAE Systems out. It’s a great company but I already own a defence ETF that gives me broad exposure to this industry.

I’m also going to rule out Chipotle. I love its food but I’m not convinced this stock’s capable of making me a ton of money over the next decade as the valuation is high and the company’s facing demand issues.

The three software companies, SAP, Tyler Technologies, and Autodesk, all look interesting. But they’re quite expensive, trading on forward-looking price-to-earnings (P/E) ratios of 38, 45, and 31 respectively.

Those ratios are high. So these stocks could increase the level of risk in my portfolio (which is already relatively high).

Should I buy this stock?

That leaves me with Taiwan Semi, the world’s largest chip manufacturing company. Now, this is a stock I’ve had on my watchlist for ages. I probably should have bought it years ago.

But Taiwan/China tensions have always spooked me. If this tension escalates, this stock could be crushed.

It could be worth the risk though. Let’s face it, demand for chips is only going to increase over the next few decades. And this company manufactures the most advanced ones. So in other words, it’s playing a huge role in the advancement of technologies like AI, self-driving cars, and robotics.

Looking at the valuation, the stock currently trades on a forward-looking P/E of 24, using next year’s earnings forecast. That’s not particularly high.

That said, chip stocks have had a huge run recently (this stock’s up almost 100% in six months). So, I’m not convinced that now’s the best time to buy Taiwan Semi for my portfolio.

The verdict on ChatGPT

So was ChatGPT helpful in my quest to enhance my portfolio? Not really. It did list some good companies. However, it didn’t seem to factor in valuations and other risks.

Overall, it didn’t highlight any opportunities that made me want to invest immediately.

The post I asked ChatGPT for 10 world-class growth shares for my retirement portfolio. Here’s what it gave me… appeared first on The Motley Fool UK.

The flip side, however, is that some of my existing holdings have been quietly building wealth. Here are five shares in my portfolio that have recently hit fresh highs.

AI stocks

Let’s start with a couple of AI stocks: Taiwan Semiconductor Manufacturing Company (NYSE:TSM) and Nvidia. Shares of leading chip foundry TSMC are up 31% since the start of September, finishing yesterday (6 October) at an all-time record of $302.

This comes after ChatGPT maker OpenAI struck chip supply deals with Advanced Micro Devices (AMD) and Nvidia to build out massive GPU infrastructure over the next few years. 

All these chips need manufacturing somewhere — and that’s where TSMC comes in. As the contract chipmaker behind Nvidia’s and AMD’s GPUs, these huge new AI deals should translate into higher sales and profits for the Taiwanese giant. 

As for Nvidia, it has also been buoyed by this ongoing AI spending spree. The stock is up 10% in the past month, taking the tech giant’s market cap a touch above $4.5trn (yes, trillions).

Agentic commerce

Next, we have e-commerce enabler Shopify (NASDAQ:SHOP), whose share price has surged 55% year to date to reach $164. Recently, Shopify surpassed its previous split-adjusted high of $167 set back in 2021.

Shareholders have also benefitted from ChatGPT-related news here. Specifically, Shopify is being integrated into ChatGPT’s new commerce features, meaning users will be able to buy products from its merchants through AI conversations.  

Therefore, when someone asks something like “show me designer trainers under £200”, ChatGPT can surface real products from Shopify-powered stores. “No links or redirects, just seamless commerce,” as Shopify puts it.

This moves us closer to a future where chatbots like ChatGPT also become AI-driven shopping assistants. Sensibly, Shopify is positioning its millions of merchants to be part of that AI-agentic future.

But now trading at 83 times forward earnings, this is a very expensive stock. Were the company’s growth to disappoint, due to tariffs or weak consumer spending, there could be a lot of valuation risk buying in at today’s price.

Two more

The fourth stock hitting a new peak in my portfolio is Uber. Now at $100, it’s up 66% so far in 2025.

Why are investors bullish on Uber? One key reason is that the company’s profitability continues to improve rapidly. But it’s also signing dozens of new partnerships, both in food delivery and the autonomous driving space.

Finally, we have HSBC, which is up 34% year to date. This puts the bank stock just under a record high, along with the FTSE 100 index.

Any value left?

Do any of these surging stocks still offer value? Yes, I think HSBC and TSMC do.

Trading at just 10 times forward earnings and offering a near-5% dividend yield, I think HSBC is worth considering. But Asia remains the bank’s main growth engine, so any setback in US-China trade talks could weigh on near-term growth.

Meanwhile, TSMC is worthy of further research, trading at 25 times forward earnings. That’s not outrageous for the world’s leading chip manufacturer, notwithstanding the geopolitical risk associated with ongoing China-Taiwan tensions.

The post 5 stocks smashing new highs in my ISA and SIPP appeared first on The Motley Fool UK.

However, for those wanting more targeted exposure to AI, here are four other stocks to consider.

Foundational layer

Let’s start with two tech firms that are absolutely central to the AI revolution. That’s ASML (NASDAQ:ASML) and Taiwan Semi (NYSE:TSM), or TSMC.

ASML‘s the only company in the world that supplies the advanced EUV (extreme ultraviolet) lithography machines needed to make cutting-edge semiconductors. TSMC’s a major buyer of these systems, using them to manufacture AI chips for Nvidia and others.  

Given their foundational importance, you’d be forgiven for thinking these stocks are super expensive. But that’s not really the case, with ASML and TSMC trading on forward price-to-earnings (P/E) ratios of 26 and 22 respectively.

By contrast, Nvidia and Tesla carry forward P/E multiples of 39 and 138, while AI software firm Palantir is on another planet at 122 times sales. So they’re discounted to many other AI stocks, particularly those in America (ASML’s Dutch).

As for risks, ASML can’t promise any growth in 2026 due to macroeconomic and geopolitical uncertainties, which are rattling chipmakers. This situation adds uncertainty, though it’s worth noting that analysts see double-digit growth resuming in 2027.

TSMC’s facing no such headwinds, and sees 20%+ growth continuing over the medium term. However, any backtracking on these targets is a risk, as is any escalation in China-Taiwan tensions.

AI agents

Next, I also think enterprise software company Salesforce (NYSE:CRM) is attractively priced. After falling 26% year to date, the stock’s forward P/E multiple is just 22 (slightly less than the S&P 500).

However, the firm continues to grow, with Q2 revenue up 10% to $10.2bn. And the company’s Agentforce platform for AI agents has closed more than 12,500 deals since launching last year, with over 6,000 of them paid.

CEO Marc Benioff commented: “These results reflect the success of our customers — like Pfizer, Marriott, and the US Army — who are transforming into agentic enterprises, where humans and AI agents work side by side to reimagine workflows, accelerate productivity, and deliver customer success.”

While economic uncertainty remains a risk and could slow customer adoption of AI agents, I remain bullish long term. Especially while the stock’s trading quite cheaply.

Footsie trust

Finally, a basket of stocks now in the shape of Scottish Mortgage Investment Trust. The FTSE 100 firm’s portfolio holds many obvious AI names including Nvidia, Meta and Amazon, as well ASML and TSMC.

However, Scottish Mortgage is also invested in AI data platforms Snowflake and Databricks. The latter’s a private company, and this is another reason to consider the trust. It has the ability to invest in exciting unlisted AI-centric firms with massive growth potential.

Naturally, given this heavy exposure to the technology, the trust would likely underperform if AI stocks fell out of favour with investors.

A solid foundation

I think ASML, TSMC, Salesforce and Scottish Mortgage could provide solid foundations for a portfolio in the age of AI. As such, I reckon some or all of them are worth exploring further.

The post Here’s a 4-stock ISA portfolio to consider for the AI revolution appeared first on The Motley Fool UK.

Note that the ‘0.34’ bit at the end of that figure is actually $340bn! That’s more than the market-cap of AstraZeneca ($253bn), the largest listed firm in the FTSE 100.

Safe to say then, Nvidia’s CEO knows a thing or two about building value.

TSMC

On Friday 22 August, Huang was in Taiwan. He was asked by a reporter what he thought about the US government taking stakes in chip companies, including potentially Taiwan Semiconductor Manufacturing (NYSE:TSM), known as TSMC.

“Well, first of all, I think TSMC is one of the greatest companies in the history of humanity, and anybody who wants to buy TSMC stock is a very smart person,” he replied.

The first part of that sentence is undeniably true. TSMC is the world’s leading semiconductor foundry, making the cutting-edge chips that power everything from iPhones to artificial intelligence (AI) data centres.

Its scale and advanced manufacturing give it a strategic importance to the global economy that few other companies can rival. Blue-chip customers include Apple, Broadcom, AMD and, of course, Nvidia.

These firms outsource chip manufacturing to TSMC rather than spend a fortune doing it themselves. Indeed, the main reason for Huang’s trip to Taiwan was in relation to TSMC’s work on the company’s next-generation AI chip architecture (called Rubin).  

Taking stock

But what about the second part of Huang’s statement? Could it be a smart stock worth considering today? I think so, though there are a couple of things worth watching.

One is that TSMC is building ‘fabs’ (a specialised factory where semiconductors are made) abroad, with a whopping $165bn committed to investments in the US. While this diversifies its global footprint and pleases the US government, it will probably weigh on profit margins, at least for a time.

Also, if the US government does one day become a TSMC shareholder (in exchange for Biden-era CHIPS Act grants), this could inflame China-Taiwan tensions.

But I think the positives far outweigh the negatives here. For starters, TSMC is at the heart of the ongoing tech/AI revolution, which is only likely to deepen over the next decade. It is the ultimate picks-and-shovels tech play, in my opinion.

And with an advanced fab costing roughly $10bn to $20bn, the barriers to entry in its industry are absolutely enormous.

Warren Buffett once said: “If you gave me $100bn and said take away the soft‑drink leadership of Coca‑Cola in the world, I’d give it back to you and say it can’t be done.” I reckon this applies even more so to TSMC, especially with its cutting-edge 2nm chips due to be launched later this year.

In Q2, AI-related demand helped revenue jump 44% to $30bn. But chief executive CC Wei said AI demand is likely to remain very strong: “Increasing AI model usage and adoption…means more and more computation is needed, leading to more leading-edge silicon demand [benefitting TSMC].”

The stock is currently trading at 24 times forward earnings, about the same as the S&P 500. At this price, I think TSMC is indeed a smart stock to consider.

The post Nvidia CEO Jensen Huang says buying this stock could be a smart move appeared first on The Motley Fool UK.

Here, I’m going to highlight three shares that were snapped up by pros in the second quarter of 2025. Are they worth considering today?

UnitedHealth

First up, we have UnitedHealth (NYSE: UNH), the largest health insurer in the world. This stock was bought by a range of top investors in Q2 including Warren Buffett (for his firm Berkshire Hathaway), David Tepper of hedge fund Appaloosa, Michael Burry (of ‘The Big Short’ fame), and the UK’s Stephen Yiu, who runs the Blue Whale Growth fund.

Now, this company’s share price has shot up since it came to light that Buffett bought stock. Currently, it’s trading at $308 – up 31% from its 2025 lows of $235.

I still believe there’s value on offer, however. At current levels, it’s still almost 50% below its highs and trading on a very reasonable price-to-earnings (P/E) ratio of 17.

It’s worth pointing out that this insurer has had some significant performance issues recently. Ultimately, it underestimated the demand for, and cost of, health insurance in the US and got its pricing all wrong.

It could take a while to turn things around. But I reckon it will get there eventually so I believe it’s worth considering today.

Taiwan Semi

Next, we have Taiwan Semiconductor Manufacturing Company (NYSE: TSM). It’s the largest semiconductor manufacturing company in the world.

This stock was snapped up by a range of top investors including billionaire Stanley Druckenmiller, tech expert Brad Gerstner of Altimeter Capital, and Stephen Yiu again.

The share price here has had an explosive move higher since its April lows. So, the pros may have paid much lower prices for their shares.

I still believe the stock is worth a look at today’s levels though. With the forward-looking P/E ratio sitting at 23, the valuation doesn’t appear to be stretched.

That said, semiconductor stocks can be volatile at times. And I reckon there might be better buying opportunities here in the months ahead.

If there’s talk of an economic slowdown, or increased geopolitical tension, the share price is likely to pull back. That could be a good buying opportunity to think about.

Alphabet

Finally, we have Google and YouTube owner Alphabet (NASDAQ: GOOG). It was bought by billionaires Bill Ackman, who runs FTSE 100 investment trust Pershing Square Holdings and Seth Klarman, CEO of Baupost Group.

It’s great to see big-name buying here. Because I’ve been arguing for a while that this Magnificent 7 stock is undervalued.

There are obviously risks around AI. Today, the way we’re searching for information is changing rapidly.

However, Alphabet isn’t sitting still. It’s rolling out some incredible AI search features.

Meanwhile, the company has the lowest valuation in the Mag 7. At present, it’s trading on a forward-looking P/E ratio of 19.3 (using next year’s earnings forecast).

Add in the fact that this company has exposure to lots of high-growth industries including cloud computing and self-driving cars, and I think the set-up is attractive. To my mind, it’s worth further research.

The post Looking for stocks to buy? Here are 3 shares the pros have been snapping up appeared first on The Motley Fool UK.

TSMC, as the company is known, is the world’s leading pureplay semiconductor foundry, which means it builds chips for others and not itself. Its list of customers is a who’s who of the tech world — Apple, Nvidia, AMD, Qualcomm, Google, and even Tesla all rely heavily on TSMC to manufacture their most advanced chips.

This means the company controls a substantial majority of global AI chip manufacturing.

Incredible growth

We saw this competitive strength on show in the first quarter. Revenue jumped 41.6% — ignoring currency moves — to $25.5bn, as demand for AI-related chips easily offset weakness in other areas (smartphone, for example). Net profit surged 60.3% to just over $11bn, representing an incredible 43% net margin.

For the full year, management expects revenue to grow in the mid-20% range. Looking further out to 2029, TSMC sees its revenue compound annual growth rate approaching 20%. For an already large firm, that’s very impressive growth.

However, one uncertainty here is global trade tensions, which might lead to a slowdown in demand. The company says it sees no evidence of this so far, but it’s a potential issue moving forward.

Another risk often highlighted with the stock is the potential for China to suddenly invade Taiwan. Again, this can’t be ruled out, though I imagine most portfolios would take a smashing if something as serious as this happened. Let’s hope it doesn’t.

To diversify its global footprint, TSMC is spending $165bn to set up US manufacturing to “power the future of AI“. It has also opened a new fab in Japan and is building one in Germany. This reduces the risk of having all chip production on the island of Taiwan.

Growth a reasonable price

Now, it’s worth mentioning that the US-listed shares of TSMC are unfortunately not eligible to be held in a Stocks and Shares ISA. But they can be bought in a general trading account or Self-Invested Personal Pension (I own some in my SIPP).

The share price is down 13% since January. And at $195, the shares are trading at 20 times forward earnings, which I think is a very reasonable valuation for a world-class company still growing strongly.

Upgrade cycle

To stay ahead of the curve, TSMC is set to begin production of its cutting-edge 2nm and 1.6nm process technologies in late 2025 and 2026, respectively. These will produce faster and more energy-efficient chips, and could trigger a fresh upgrade cycle across the tech industry.

Looking ahead, I expect TSMC to stay at the centre of many powerful technology trends. From AI data centres and VR headsets to electric vehicles and driverless taxis, they all need tons of advanced chips.

I think the stock represents high-quality growth at a very reasonable price and is worth considering.

The post 1 world-class AI stock to consider buying in June appeared first on The Motley Fool UK.

But one reason the share price has fallen is an elevated risk environment due to international tariff disputes. So, for now, Nvidia remains on my watchlist — but I have not yet added it to my portfolio.

By contrast, this month I did buy some shares for the first time in one of the chip designer’s key suppliers: Taiwan Semiconductor Manufacturing Co. (LSE: TSM), known as TSMC.

Similar dynamics over the long term

They may be in different parts of the value chain, but I reckon both TSMC and Nvidia look set to do well over the long run even though tariffs are a big risk to profitability for both in the short term.

Demand for chips is sky high right now thanks to companies continuing to spend heavily as they roll out AI.

I expect demand to remain very high for years to come. AI may get even bigger from here, or it could be that after an initial spending surge most companies see few benefits and demand for AI chips cools.

But regardless of what happens to AI, the long-term demand curve for chips has grown steeply. With ever more digital products within financial reach of ever more customers, I expect that to continue over the long term.

Here’s why I bought a share other than Nvidia

That ought to be good news for chip designers including Nvidia. But it ought also to be good news for the companies that actually make those chips. There are very few of those – and TSMC is a key player.

The necessary know-how, expertise, and intellectual property to design chips like Nvidia does means its industry has a high barrier to entry. The same is true on the manufacturing side.

Nvidia stock has soared partly because its large customer base, exclusive designs, and unique intellectual property have helped support high profit margins. Last year, its net profit margin was 56%.

Many of the same advantages Nvidia has, from unique IP to a large customer base, are shared by TSMC. Last year, its net profit margin was 41%.

So, why did I plump for TSMC rather than buying Nvidia at the moment?

I think both companies have a large ‘moat’ in terms of protecting their business, but both face risks from export bans and tariffs. I reckon TSMC’s position is arguably even more defensible than Nvidia’s because of its unique manufacturing footprint and capabilities.

But the main reason was simply one of valuation.

Both seem like outstanding businesses to me. Although Nvidia’s profit margins are higher, both companies are highly profitable. But even after recent falls, Nvidia trades for 39 times earnings. At 19 times earnings, TSMC is around half as costly.

That price is still not cheap by my usual standards – but as a long-term investor, I reckon it is potentially a great bargain!

The post I’ve been eyeing Nvidia stock, but I just bought this chip giant instead appeared first on The Motley Fool UK.

High exposure

I have a handful of shares I would say are certainly higher risk. For example, Taiwan Semiconductor (NYSE: TSM) — or TSMC as it’s known — is the world’s leading chipmaker, putting it at the epicentre of the global semiconductor supply chain.

It manufactures chips for Nvidia (NASDAQ: NVDA), Apple, Qualcomm, and many more. For now, TSMC says it isn’t seeing any slowdown in demand, with robust demand for AI chips offsetting softness elsewhere. But the complex web of ever-changing compliance and trade policies is obviously a major headache.

The firm says it cannot fully prevent AI chips it manufactures indirectly reaching China. That’s unlikely to stop the US trying to prevent all moderately advanced chips ending up there.

For those interested in a deeper understanding, I highly recommend Chris Miller’s book Chip War: The Fight for the World’s Most Critical Technology.

Anyway, TSMC stock looks very cheap again — it’s trading at just 12.3 times 2026’s forecast earnings! At that price, I’m hoping most of the risk (and more) is already priced in.

More semiconductor exposure

Elsewhere, Nvidia is increasingly at the sharp end of things. It expects to take a $5.5bn hit in its current first quarter after export restrictions to China for its H20 AI chips were announced.

This is a stock I reintroduced into my portfolio near the start of April. But I wasn’t naïve to the risks. On 28 March, I wrote: “I’m expecting further market volatility due to tariffs and worries about restricted Nvidia chip sales to China.”

Again, Nvidia stock will likely be volatile until there’s more clarity over global trade. But its largest (US) customers remain committed to heavy investments in AI.

Moderate and low exposure

For the rest of my portfolio, the risks vary on a company-by-company basis. Take Ferrari, which is directly impacted by US auto tariffs and potential exposure to duties on Europe-made cars in China. However, the Italian automaker has insane pricing power that it can flex to offset these.

At the opposite end, language learning app Duolingo appears to have low risk. It’s a digital-only platform with minimal exposure to physical supply chains or international tariffs.

Naturally, there are second- and even third-order effects from all of this. A global economic downturn — now a distinct possibility — would be bad for both consumers and companies (including Uber and Visa).

Here are some others.

Company	Risk Level	Rationale
Axon Enterprise	Low	US-based manufacturing, mainly domestic customers.
MercadoLibre	Moderate	Latin American e-commerce; indirect exposure via merchants sourcing from China.
Visa	Low	Digital payments not subject to tariffs, but reduced cross-border transaction risk.
Intuitive Surgical	Moderate	Robotics firm with many of its instruments made in Mexico.
Shopify	Moderate	E-commerce platform is digital, but many merchants rely on Asia for inventory.
Uber	Low	Primarily service-based (mobility, food delivery).
HSBC	Moderate	Major exposure to China; sensitive to Asia and financial trade tensions.
Games Workshop	Moderate	UK-based manufacturer; potential cost risk from tariffs.
CrowdStrike	Low	Pure cybersecurity software firm.
AstraZeneca	Moderate	Global pharma giant with operations in China; possible tariff exposure.

My takeaway

Now, I should end by saying that I currently have no intention of selling any of these stocks due to fear of the unknown. But I am expecting a lot more volatility in the months ahead as companies pull guidance and adjust expectations.

By understanding the tariff and trade risks around my investments, I’m less likely to be totally caught off guard by nasty surprises. It will also help me decide whether any sell-off is overblown and there’s a buying opportunity.

The post How will Trump’s tariffs impact my Stocks and Shares ISA? appeared first on The Motley Fool UK.

Longer term though, shares of Taiwan Semiconductor, or TSMC, have done splendidly. They’ve soared more than 300% in six years, as the firm’s leading position manufacturing advanced microchips has made it integral to the digital revolution.

Recently, TSMC’s growth has been boosted by the artificial intelligence (AI) boom. It works closely with Advanced Micro Devices, Nvidia, Broadcom, OpenAI, and others, while also making the latest chips powering Apple’s iPhone 16 lineup.

Indeed, TSMC now commands roughly 67% of the global third-party foundry market — and more than 90% of advanced chips!

Surging AI demand

How is that translating into profits? Very nicely. Last year, revenue increased 30% year on year to $90.1bn, while earnings per share surged by almost 40%. The net profit margin reached an incredible 40.5%, up from 38.8% the year before.

However, it wasn’t all positive. Both its Internet of Things (IoT) and digital consumer electronics platform segments decreased 15% and 6%, respectively, in the fourth quarter. And the firm does still experience cyclical demand for auto, computer, and smartphone chip sales.

Yet any softness in parts of the business is easily being offset by surging demand for AI chips.

Chief executive CC Wei commented: “Even after more than tripling in 2024, we forecast our revenue from AI accelerators to double in 2025 as a strong surge in AI-related demand continues as a key enabler of AI applications.”

Weakening silicon shield

One unavoidable risk with TSMC is geopolitics. Its most advanced chip manufacturing — including its 3nm and upcoming 2nm nodes — still takes place in Taiwan, roughly 90 miles away from mainland China.

Historically, Taiwan’s dominance in chipmaking has arguably protected the island from a Chinese invasion (the so-called “silicon shield”). That’s because the result would be a chip shortage and chaos in global trade, thereby threatening China’s own prosperity. 

To reduce dependence on Taiwan, President Trump has encouraged TSMC to set up advanced fabrication facilities in the US. While this improves supply chain resilience for US customers, it might also weaken the silicon shield. 

In other words, if TSMC’s cutting-edge chipmaking moves abroad, Taiwan becomes less essential — and potentially less protected.

Meanwhile, the company’s colossal $165bn commitment (so far) to US manufacturing and research and development might lead to margin pressure down the road.

Bargain valuation

This dynamic might go some way to explaining the stock’s valuation. It’s currently trading at 16.5 times this year’s forecast earnings, falling to around 14 for 2026 and 11.5 by 2027.

Granted, there are geopolitical risks here, but this high-quality stock looks like it’s on sale to me. Especially as TSMC is set for further growth through its enabling of developing megatrends like AI, IoT, and robotics.

Also, electric and autonomous vehicles require many more semiconductors than petrol cars. Tesla collaborates with TSMC to produce chips for its Full Self-Driving system.

Unfortunately, TSMC shares aren’t eligible for a Stocks and Shares ISA. But I think they’re well worth considering for a self-invested personal pension (SIPP).

The post 1 top stock offering incredible value right now! appeared first on The Motley Fool UK.

Here, I’ll look at a pair of US-listed growth shares that have been marching upwards for years. But in the fourth quarter of 2024, they did the business again and were duly rewarded with further price gains.

Looking at their dominant competitive positions today, I think both are set up for further market-beating performances over the long term. I feel both are worthy of further research.

Intuitive Surgical

The first is robotic-assisted surgery pioneer Intuitive Surgical (NASDAQ: ISRG).

The stock was already up more than 150% in the five years prior to 15 January when the company released a Q4 trading update. Yet the market’s been happy to add another 12% after Intuitive said it expects 25% top-line growth (about $2.41bn) rather than Wall Street’s 14%.

This surprise beat came after it placed 493 of its da Vinci surgical systems during the quarter, including 174 of its latest da Vinci 5 robots. This next-generation iteration has 10,000 times the computing power of its predecessor!

For the full year, Intuitive placed 1,526 da Vinci systems, an 11% increase, taking its total installed base to about 10,000. And it expects full-year revenue of around $8.35bn, a 17% rise.

This is encouraging for shareholders due to the firm’s razor-and-blades business model. The more surgical robots it places, the more revenue it gets from selling instruments and accessories needed to run them. Most of the company’s revenue is recurring.

One key risk here would be another pandemic. During the last one, the company’s revenue declined significantly as operations were delayed or cancelled. Also, trading at 78 times forward earnings, this high-quality stock’s far from cheap.

However, the company remains a global leader in the robotic-assisted surgery space, and the long-term future continues to look very bright.

TSMC

The second company that released blowout Q4 numbers was Taiwan Semiconductor Manufacturing (NYSE: TSM). The stock’s up 9% since the chipmaking giant reported $26.9bn in quarterly revenue (up 38%) and a 57% rise in net profit ($11bn). Both figures beat Wall Street’s expectations.

Many tech firms outsource their chip manufacturing to TSMC, including Apple, Nvidia, Advanced Micro Devices, Broadcom, and Arm Holdings. And it’s custom AI chips that are really driving growth, with revenue from artificial intelligence (AI) accelerators more than tripling in 2024.

The firm’s now predicting revenue will grow at a five-year compound annual growth rate (CAGR) of 20%!

One challenge would be an unexpected slowdown in AI spending, especially as many of TSMC’s other markets are weak right now (notably smartphones and electric vehicles). It’s really the insane growth of AI that’s offsetting this weakness.

As for valuation, the forward P/E ratio’s 25. That strikes me as reasonable for a dominant company growing at 20% a year and capturing around 90% of high-performance computing chip orders.

Looking ahead, the demand for semiconductors is only likely to increase as megatrends like AI, cloud computing, 5G, electric vehicles and robotics play out. TSMC’s perfectly placed to benefit as the chip manufacturer of choice for many blue-chip firms.

The post 2 incredible growth stocks that crushed it in Q4! appeared first on The Motley Fool UK.