Tesla (NASDAQ: TSLA) is currently the eighth-largest company in the world with a market cap of just over $1.05 trillion as of this writing.

The stock underperformed the S&P 500 for the majority of 2024, but it has jumped nearly 50% in the past month. The results of the U.S. elections have helped drive Tesla’s share price higher, thanks to the belief that CEO Elon Musk’s close relationship with President-Elect Donald Trump could benefit the electric vehicle (EV) manufacturer during the new administration.

However, Tesla’s recent financial performance has been less than impressive as you can see below.

Data by YCharts.

Tesla stock’s underperformance through most of 2024 can be attributed to growing competition that’s bringing down its delivery numbers, as well as the company’s failure to impress investors with the recent unveiling of the Cybercab. Moreover, Tesla’s earnings are expected to increase at just over 4% annually in the next five years, according to the analyst consensus, suggesting the company’s growth may remain bumpy going forward.

With this challenging outlook, it won’t be surprising to see Tesla overtaken in the list of world’s largest companies. Specifically, Taiwan Semiconductor Manufacturing (NYSE: TSM), popularly known as TSMC, and Broadcom (NASDAQ: AVGO) are fast on Tesla’s heels. Both companies are expected to enjoy strong growth due to unprecedented demand for their chips too.

Here’s a closer look at the reasons why these two semiconductor stocks may be able to surpass Tesla by market cap over the next five years.

1. Taiwan Semiconductor Manufacturing

TSMC is the world’s 10th largest company with a market cap of around $995 billion as of this writing. It isn’t far behind Tesla thanks to its position as the leading player in the semiconductor foundry industry with a market share of 62%, according to Counterpoint Research. It enjoys a massive lead over second-place Samsung, which has a foundry market share of 13%.

This allows TSMC to make the most of the secular growth of the semiconductor market, which is being driven by the growing demand for artificial intelligence (AI) applications. From smartphones to personal computers (PCs) to data centers, AI is positively impacting multiple verticals, which bodes well for TSMC as it manufactures chips for all the leading players serving these sectors.

From Nvidia to Apple to AMD to Qualcomm, all the major fabless chipmakers use TSMC’s fabrication plants for their chip manufacturing. Not surprisingly, TSMC’s growth has shot up remarkably in 2024. The Taiwan-based company’s revenue in the first 10 months of 2024 increased 31% year over year.

The company is forecasting a 30% increase in revenue in full-year 2024 to $90 billion, which would be a solid improvement over the 9% decline it witnessed last year. More importantly, the revenue forecast for the next couple of years has been rising as well with the company expected to maintain top-line growth of around 20%.

Data by YCharts.

Even better, analysts expect this growth to flow to the bottom line as earnings increase at an annual rate of 26% over the next five years.

Meanwhile, the stock is trading at 34 times earnings, a big discount to Tesla’s earnings multiple of 90. Investors looking to add a tech stock to their portfolios should consider TSMC — it may not be long before the company surges past Tesla with a higher market cap.

2. Broadcom

Just like TSMC, Broadcom is also taking advantage of growing demand for AI chips. Broadcom specializes in making custom chips, known as application-specific integrated circuits (ASICs), and it has been billed as the second-most important AI chip company after Nvidia.

In the fiscal 2024 third quarter (ended Aug. 4), sales of the company’s custom AI chips increased an impressive 3.5x from the year-ago period. That trend can be expected to continue as Broadcom is reportedly the leading player in the custom AI chip market with an estimated share of 55% to 60%, according to JPMorgan.

The investment bank believes Broadcom has a revenue opportunity of $20 billion to $30 billion in custom AI chips, which could grow at an annual rate of 20% in the future. The company has already landed key customers such as Meta Platforms and Alphabet, and a recent report from Reuters states that even OpenAI is looking to build an in-house chip with Broadcom’s help.

Broadcom’s AI opportunity isn’t limited to just custom chips. Its networking business has also received a nice shot in the arm thanks to growing deployment of AI data centers with fast connection needs. The company’s networking revenue increased an impressive 43% year over year in fiscal Q3, driven mainly by the growing deployment of AI clusters by hyperscale cloud service providers.

Thanks to such solid tailwinds, it is easy to see why Broadcom’s earnings are forecast to increase at an annual rate of 20% for the next five years. That’s well above the growth that Tesla is expected to deliver over a similar period. Given that Broadcom has a market cap of $813 billion, it is just 27% away from matching Tesla’s current market cap. Broadcom is already the 11th-largest company in the world, putting it just behind TSMC.

And like TSMC, Broadcom seems poised to outgrow Tesla within the next five years, considering its stronger earnings growth and its robust position in the AI chip market.

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JPMorgan Chase is an advertising partner of Motley Fool Money. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, JPMorgan Chase, Meta Platforms, Nvidia, Qualcomm, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.