As the global economic landscape evolves, identifying burgeoning companies with potential to scale into trillion-dollar entities is a pursuit that captivates investors worldwide. In the realm of pharmaceuticals, technology, and semiconductor manufacturing, three standout enterprises are reshaping industries, poised to reach meteoric heights.
The first one’s strategic pivot beyond its primary product and its robust revenue diversification strategy is redefining success in the pharmaceutical domain. Meanwhile, the second is the relentless pursuit of cutting-edge semiconductor technology. Lastly, the third’s market resilience amid industry flux position them as prime candidates for monumental growth.
Through a comprehensive analysis of these rising stars, let’s delve into fundamental insights. Read more to explore tomorrow’s trillion-dollar giants and their trajectories toward reshaping industries and investor portfolios.
AbbVie (ABBV)
AbbVie’s (NYSE:ABBV) revenue diversification beyond Humira is crucial. The growth platform, fueled by-products like Skyrizi, Rinvoq, Vraylar, and Botox, showcases robust performance with significant revenue growth. For instance, Skyrizi and Rinvoq exhibited more than 50% operational growth. It contributes to a double-digit revenue growth rate above 12% for the platform.
Additionally, revenue segments in immunology, neuroscience, oncology, and aesthetics are pivotal for AbbVie’s growth trajectory. Neuroscience and oncology showed substantial operational sales growth rates of more than 20% and $1.5 billion in revenue, respectively.
Furthermore, Skyrizi’s performance in the psoriasis market, capturing one-third of the total prescriptions and 50% of in-play patients, exemplifies its market dominance. Moreover, its success in other segments, like psoriatic arthritis and Crohn’s disease, positions it as a leader. Rinvoq’s progress in gastroenterology, with over 25% of total in-play patients sharing ulcerative colitis and significant growth potential in Crohn’s disease, solidifies its position as a fast-ramping asset.
Despite a 36.2% decline in global Humira sales due to biosimilar competition, AbbVie has effectively managed the erosion in the U.S. International markets are performing better than expected. ABBV’s robust R&D programs show promise for the latter part of the decade and beyond. Initiatives in immunology, bispecifics, ADCs, and novel I-O in oncology, neuropsychiatric, and neurodegenerative disorders highlight the company’s focus on innovation and potential future revenue streams.
Finally, near-term financial outlooks, including upgraded revenue guidance and adjusted EPS, are consistently raised. This suggests progressiveness in AbbVie’s growth platforms. Overall, investors anticipate a return to robust revenue growth in 2025, with a high single-digit CAGR to the end of the decade.
TSMC (TSM)
TSMC’s (NYSE:TSM) key strength lies in its cutting-edge semiconductor technologies. Notably, successfully ramping up the 3-nanometer (N3) technology is pivotal. The N3’s strong production, good yield, and robust ramp-up in the year’s second half cater to high-performance computing (HPC) and smartphone applications.
Beyond N3, TSMC focuses on N3E, an enhanced version with improved performance, power, and yield. Clearly, it demonstrates the company’s aim on continuous technological advancement. Additionally, the planned 2025 introduction of the 2-nanometer (N2) technology showcases TSMC’s forward-looking approach. TSMC is aiming for industry-leading density and energy efficiency.
Further, TSMC’s revenue breakdown reveals a substantial reliance on advanced technologies (7-nanometer and below). It accounts for 59% of wafer revenue, underscoring the company’s dedication to staying at the forefront of technological advancements and providing clients with cutting-edge solutions.
The revenue contribution by platform showcases TSMC’s diversified market approach. True, HPC and smartphone segments hold significant portions. Additionally, TSMC is expanding its presence in IoT, automotive, and other sectors. It is aiming for a balanced portfolio across various industries.
Furthermore, TSMC’s consistent sequential revenue growth and sustained profitability underscore the company’s financial resilience. Also, it reflects the company’s adeptness in navigating market fluctuations while maintaining a solid market position. The planned CapEx of approximately $32 billion for 2023 signifies TSMC’s focus on future growth. A strategic allocation of 70% to advanced process technologies and 20% to specialty technologies emphasizes TSMC’s focus on innovation and capacity enhancement.
Lastly, while anticipating market cyclicality, TSMC remains optimistic about continued growth. Factors such as advancements in 3-nanometer technology, potential demand stabilization in key markets like PCs and smartphones, and increasing demand for energy-efficient computing contribute to this outlook.
ASML (ASML)
Looking at ASML’s (NASDAQ:ASML) bookings and backlog, in Q3 2023, net system bookings amounted to EUR 2.6 billion. Also, 80% of it is driven by logic and the rest by memory. Despite a moderation in orders due to industry caution and cash flow management, the backlog stood strong at over EUR 35 billion by the end of Q3. The level of the backlog is reflecting sustained demand.
Despite uncertainties, ASML expects a visible inflection point by the end of 2023 but a conservative view for 2024 due to macro uncertainties. While lithography tool utilization rates remain lower than usual, logic sector utilization exhibits signs of improvement. But memory is yet to show similar recovery trends.
Notably, China’s strong demand for deep ultraviolet (DUV) lithography systems is noticeable. ASML is continuously fulfilling delayed orders due to previous supply-demand imbalances. Despite potential regional shipment adjustments, global demand scenarios remain largely unchanged, preserving long-term growth prospects for the industry.
Looking ahead to Q4 2023, ASML expects net sales between EUR 6.7 billion and EUR 7.1 billion, with base management sales near EUR 1.4 billion. These projections indicate a confident outlook despite ongoing market uncertainties. Additionally, anticipated gross margin for Q4 between 50% and 51% reflects a cautious approach. Managing these impacts while maintaining healthy margins showcases ASML’s adaptability and strategic planning.
Finally, ASML anticipates 2024 as a transition year, preparing for substantial growth projected in 2025. Factors contributing to this anticipation include secular growth drivers (like energy transition, AI, and electrification), cyclical industry upturns, and the expansion of fabs globally.
As of this writing, Yiannis Zourmpanos held long positions in TSM and ASML. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
