Two Growth Stocks with Doubling Potential: Scalability and Secular Trends

The investment case for both TSMC and The Trade Desk rests on a simple, powerful formula: dominant position in a massive, secular growth market, coupled with a business model engineered for rapid scaling. For growth investors, this setup creates a clear path to market-beating returns, with the potential for their current valuations to more than double.

TSMC is the essential manufacturing partner for the AI and advanced computing revolution. Its role is not just important; it is indispensable. The company commands a 72% share of the global foundry market, a position that has expanded from 66% a year ago. This scale is its moat. With fabrication lines sold out and customers paying a premium for capacity, TSMC is positioned to capture the massive tailwind from surging semiconductor demand. Bank of America estimates the industry's revenue could surge by 25% in 2026, driven by a 50% jump in AI chip demand. TSMC's earnings growth has already outpaced the broader market, with estimated earnings of $10.46 per share in 2025 and projected growth of 20% or more in the following two years. The thesis is that this growth could accelerate further, with earnings potentially reaching $19.07 per share in a couple of years. At its current earnings multiple, that trajectory alone could drive a more than doubling of its market cap.

The Trade Desk presents a similar thesis, albeit from a different angle. The company is a dominant, AI-powered platform in digital advertising, a market it has helped define. Its recent stock performance has been brutal, with the shares down more than 70% from its all-time high. This underperformance has created a disconnect between price and fundamental growth. Despite the turmoil, The Trade Desk is still growing at a market-beating pace, with revenue rising 18% year-over-year in the third quarter and Wall Street expecting 16% growth for 2026. The company is actively working to fix a recent misstep with its AI platform, Kokai, and is navigating competitive pressure from players like Amazon. Yet its core platform remains a high-barrier, recurring revenue business. The current valuation, trading at just 18.5 times forward earnings versus the S&P 500's 22.1, suggests the market is pricing in a permanent slowdown. The investment case is that this is a temporary overreaction to execution issues, not a fundamental decline in the business's growth trajectory.

Both companies operate in markets with high barriers to entry and recurring revenue models, enabling efficient scaling. TSMC's scale and customer base lock in demand, while The Trade Desk's platform creates switching costs and predictable revenue streams. For a growth investor, the opportunity is clear: buy a leader in a secular trend while its stock is temporarily out of favor, betting that the underlying scalability of the model will eventually drive the share price to reflect its true market dominance and growth potential.

Growth Metrics and Valuation Analysis

The doubling thesis hinges on whether these companies can sustain their expansion and whether the market is correctly pricing that potential. The metrics tell a clear story: both TSMC and The Trade Desk are growing at a pace that far exceeds the broader market, but their valuations tell a different tale-one of opportunity.

For TSMC, the growth engine is built on scale and pricing power. The company delivered an estimated 49% jump in earnings in 2025 to $10.46 per share, a pace that already outstripped the S&P 500. Analysts expect this to continue, with earnings projected to grow at 20%-plus rates in 2026 and 2027. The real upside, however, is the potential for acceleration. With fabrication lines sold out and customers paying a premium, the company could clock a faster earnings growth rate of 35% in the coming years, pushing its bottom line to $19.07 per share in a couple of years. This isn't just steady growth; it's a model designed for exponential scaling within a massive, expanding market. The semiconductor industry's revenue is estimated to surge by 25% in 2026, driven by a 50% jump in AI chip demand. TSMC's critical role as the world's largest contract manufacturer, serving over 500 customers, positions it to capture this entire tailwind. The market's current valuation, at a trailing earnings multiple of 35, appears conservative given this trajectory. If the company maintains its current multiple while hitting that accelerated earnings target, the stock's path to more than double is mathematically straightforward.

The Trade Desk presents a different but compelling setup. The company is still growing at a market-beating pace, with revenue rising 18% year over year in the third quarter and Wall Street expecting 16% growth for 2026. Yet its stock has been crushed, down more than 70% from its all-time high. This disconnect is the core of the opportunity. The valuation now reflects a permanent slowdown, but the fundamentals suggest a temporary overreaction. The stock trades at just 18.5 times forward earnings, a significant discount to the S&P 500's 22.1 times forward earnings. For a company with this kind of growth, that multiple is too low. The setup is classic for a bounce-back story: a high-quality, recurring revenue business facing execution issues and competitive pressure, but with a scalable platform and a market that continues to expand. The key metric here is the potential for multiple expansion. If The Trade Desk can successfully fix its AI platform and stabilize customer growth, the market is likely to re-rate the stock closer to its historical premium, driving returns that compound the underlying earnings growth.

A related point underscores the strength of the sector. Micron Technology, another key beneficiary of the AI-driven memory boom, is seen as significantly undervalued with its 2026 memory chips sold out. This highlights a broader trend: the semiconductor cycle is powerful, and the companies with the most critical capacity and technology are being rewarded with pricing power and growth acceleration. For a growth investor, the takeaway is clear. TSMC's valuation is a function of its ability to scale earnings within a booming market, while The Trade Desk's valuation is a function of a temporary misstep in a growing industry. Both present a path to doubling, but through different mechanisms: one via accelerated earnings, the other via re-rating.

Risks and Competitive Landscape

No growth thesis is without its risks, and the path to doubling for these leaders will be tested by cyclical pressures, competitive threats, and the inherent challenges of scaling. For a growth investor, the key is not to ignore these risks but to assess how well each company is positioned to navigate them.

For TSMC, the primary risk is the cyclical nature of the semiconductor industry. The company's explosive growth is fueled by a massive, secular demand surge for AI chips. Yet history shows that even powerful trends can experience sharp corrections. The recent past includes a notable bust in AI data center demand, which serves as a stark reminder that demand cycles can reverse quickly. While the current outlook is bullish, with Bank of America estimating a 25% surge in semiconductor industry revenue in 2026, the company's sold-out capacity and premium pricing power provide a buffer. Its massive scale and diversified customer base of over 500 clients also spread the risk. The company is managing this by maintaining disciplined capital expenditure to match demand, avoiding the overcapacity that can trigger a downturn. The risk is real, but the company's dominant position and pricing power are its best defenses.

The Trade Desk faces a different, more immediate threat: intense competitive pressure in digital advertising. The company's recent stumble with its AI platform, Kokai, has created an opening for rivals. The most formidable competitor is Amazon, which has captured a large part of the market The Trade Desk was targeting. Amazon's advantage is its unparalleled consumer data, which provides more accurate targeting than any other player. This isn't just a theoretical threat; it's a direct attack on The Trade Desk's core value proposition. The company is actively working to fix its AI platform and stabilize customer relationships, but regaining lost ground will be difficult. The risk here is that competitive erosion could slow the company's growth trajectory, making its current valuation more difficult to justify.

A third, overarching risk for any company scaling rapidly is execution. This applies to both TSMC and The Trade Desk. For TSMC, scaling production to meet surging demand requires flawless supply chain management and the successful integration of next-generation manufacturing technologies, like its N2 node. Any disruption in this complex process could limit growth. For The Trade Desk, execution risk is about fixing its AI platform and retaining customers while navigating a crowded market. The company's ability to manage this transition will determine whether it can return to its expected 16% growth path for 2026. Both companies are demonstrating a focus on these areas-TSMC through its disciplined CAPEX and technological leadership, and The Trade Desk through its efforts to repair its platform. The bottom line is that the growth thesis is not guaranteed. It depends on these companies successfully managing cyclical headwinds, competitive assaults, and the operational complexities of scaling. For the investor, the opportunity lies in betting that their leadership positions and management focus will see them through.

Catalysts and What to Watch

The path to doubling for these growth leaders will be validated or challenged by specific near-term events. For investors, the focus should be on three critical catalysts that will signal whether the underlying growth thesis is intact or under threat.

For TSMC, the primary catalyst is the continued strength of AI chip demand. The company's explosive growth is directly tied to this trend, with the semiconductor industry's revenue estimated to surge by 25% in 2026. Investors should monitor any announcements from its key customers, like Nvidia and Apple, regarding production plans for next-generation AI chips. These signals will confirm whether the massive demand tailwind is holding steady or beginning to soften. Any sign of a slowdown would directly challenge the company's earnings growth projections and its ability to maintain premium pricing power. The risk of a demand bust, as seen in the recent past, remains a real possibility that will be tested by these forward-looking indicators.

For The Trade Desk, the catalyst is operational recovery. The company's recent stumble with its AI platform, Kokai, has been a major drag. The key metric to watch is the platform's adoption and customer retention. Investors need to see tangible improvements in user engagement and a stabilization of revenue growth toward the expected 16% for 2026. More broadly, watch for any strategic partnerships or product enhancements aimed at countering competitive pressure from Amazon, which has captured a large part of the market The Trade Desk was targeting. Success here would demonstrate the company's ability to defend its position and re-engage its growth trajectory.

A third, overarching catalyst is broader market sentiment and analyst ratings. Both stocks are considered magnificently profitable growth prospects, but their valuations have been pulled down by specific concerns. For TSMC, a shift in analyst sentiment toward more aggressive earnings estimates could drive a re-rating. For The Trade Desk, a stabilization in its growth path and a return to positive customer momentum could trigger a multiple expansion, as the stock currently trades at a significant discount to the S&P 500. The market's willingness to re-rate these names will be a key driver of returns, especially for The Trade Desk, where the valuation gap is most pronounced.

In practice, these catalysts connect directly to the risks and growth drivers discussed earlier. TSMC's customer announcements will validate its demand thesis against cyclical headwinds, while The Trade Desk's platform recovery will counter competitive erosion. The bottom line is that the doubling potential hinges on these near-term signals confirming that the companies can successfully navigate their respective challenges and continue scaling their dominant positions.