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to generate multibagger gains.10 stocks we like better than Taiwan Semiconductor Manufacturing ›During the month of May, stocks started exhibiting some much-needed resilience. The S&P 500 and Nasdaq Composite indexes rose by 5% and 8%, respectively.After bearing the brunt of precipitous sell-offs early this year, semiconductor stocks have started to stage a comeback. Last month, shares of Nvidia and Broadcom climbed by more than 20%, while Advanced Micro Devices surged by roughly 15%.Lagging behind the usual suspects, however, was Taiwan Semiconductor Manufacturing (NYSE: TSM). While the stock's 12% gains beat the broader market, they still trail the chip industry's leading names.Below, I'll delve into why Taiwan Semi looks like a great buy right now. From there, I'll illustrate how a $1,000 investment could wind up being a multibagger for patient, disciplined investors.Nvidia and AMD design chipsets known as graphics processing units (GPU). GPUs have the capability to run sophisticated calculations at fast speeds, which gives them an edge over traditional compute processes when it comes to developing generative AI applications.Cloud hyperscalers such as Microsoft, Alphabet, and Amazon, as well as big tech giants Meta Platforms and Oracle, have been buying GPUs in droves over the last few years in an effort to build out data centers and infrastructure services. While the robust demand for chips directly benefits Nvidia and AMD, Taiwan Semi has been an indirect beneficiary of these tailwinds.The reason? Because Taiwan Semi specializes in foundry services that actually manufacture the chip designs from Nvidia, AMD, and many others. In other words, the largest data center businesses in the world rely heavily on Taiwan Semi's fabrication business.Image source: Getty Images.In the chart below, I've illustrated Taiwan Semi's revenue, gross profit, and net income over the last three years. As the slopes of the lines indicate, TSMC's sales and profitability profile are both steepening.TSM Revenue (TTM) data by YChartsTo me, this signals two things. First, demand for chips is on the rise -- hence the revenue line is rising. However, the more lucrative trend is that gross margin and net income are accelerating in parallel with sales. This suggests that Taiwan Semi has achieved a fair degree of pricing power relative to competitors such as Intel.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5006,000.36 +61.06 (+1.03%)Dow 3042,762.87 +443.13 (+1.05%)Nasdaq19,529.95 +231.50 (+1.20%)Russell 20002,132.25 +34.89 (+1.66%)VIX16.77 -1.71 (-9.25%)Gold3,331.00 -44.10 (-1.31%)PortfolioSign in to access your portfolioSign inTop gainersRXRX Recursion Pharmaceuticals, Inc. 5.49 +0.92 (+20.13%)MANU Manchester United plc 16.41 +2.60 (+18.83%)QXO QXO, Inc. 19.00 +2.25 (+13.43%)QBTS D-Wave Quantum Inc. 18.62 +2.15 (+13.05%)LMND Lemonade, Inc. 39.88 +4.12 (+11.52%)Top losersLULU lululemon athletica inc. 265.27 -65.51 (-19.80%)DOCU DocuSign, Inc. 75.28 -17.62 (-18.97%)BRZE Braze, Inc. 29.73 -6.37 (-17.65%)ORLA Orla Mining Ltd. 11.11 -1.24 (-10.04%)ABM ABM Industries Incorporated 46.61 -4.65 (-9.07%)Most activeAPLD Applied Digital Corporation 13.86 +1.09 (+8.54%)TSLA Tesla, Inc. 295.14 +10.44 (+3.67%)NVDA NVIDIA Corporation 141.72 +1.73 (+1.24%)LCID Lucid Group, Inc. 2.1500 +0.0200 (+0.94%)F Ford Motor Company 10.26 +0.16 (+1.58%)Earnings eventsTrending tickersXRP-USD XRP USD 2.26 +0.08 (+3.45%)SCAI.PVT Scale AI 16.61 0.00 (0.00%)META Meta Platforms, Inc. 697.71 +13.09 (+1.91%)BTC-USD Bitcoin USD 105,751.42 +251.13 (+0.24%)STLA Stellantis N.V. 9.87 +0.19 (+1.96%)Top economic events