Evaluating Investment Merits of TSMC, Alphabet, and Adobe

A look at undervalued stocks: TSMC, Alphabet, and Adobe could provide significant upside for investors. These tech giants are cheaper than the S&P 500, presenting an intriguing buying opportunity.

Date: 29-03-2025

AI Rating: 7

Market Valuations Suggest Buy Opportunity

The report highlights three prominent technology companies—Taiwan Semiconductor Manufacturing (TSM), Alphabet (GOOG, GOOGL), and Adobe (ADBE)—as undervalued compared to the broader market. Each of these companies is trading at lower forward price-to-earnings (P/E) ratios than the S&P 500, which is valuable information for investors seeking growth at reasonable valuations.

Earnings Per Share (EPS)

The report provides some key insights into the expected growth in earnings per share for Alphabet. The anticipation of 12% and 14% EPS growth in subsequent years is indicative of a solid revenue model that also incorporates efficiency measures, making Alphabet an attractive case for investors focused on profitability and growth. Moreover, with the expected upcoming revenue increase for Adobe due to share buybacks, there is potential for its EPS to grow faster than prior estimates.

Revenue Growth

For Taiwan Semiconductor, a projected revenue growth rate of nearly 20% over the next five years is a critical factor. This surpasses the broader market's historical growth expectation of around 10%, signaling a significant growth opportunity. Meanwhile, Alphabet's revenue growth is forecasted at a more stable rate of 11% annually, which, while not as aggressive as TSMC, indicates a continuing robust business in advertising.

Investment Consideration

Given the forward-looking nature of valuations, these three companies appear to be mispriced at current market levels. Investors should consider these stocks as potential value plays that might reward them with relative certainty in uncertain market conditions. While not deemed 'growth stocks,' each company has a compelling narrative to outperform the market.

Stocks: TSM GOOG GOOGL ADBE