2 Tech Stocks I Would Buy Before SpaceX

The article argues that SpaceX is not yet profitable and may debut at a high valuation, while favoring Alphabet and Taiwan Semiconductor Manufacturing as better tech investments. Alphabet posted first-quarter 2026 revenue growth of 22% year over year, cloud revenue up 63%, operating margin of 36.1%, and net income up 81%. TSMC reported first-quarter 2026 revenue growth of 41%, with gross margin at 66.2% and operating margin at 58.1%, underscoring strong AI-linked demand.

Analysis

The market is being asked to choose between two very different compounding profiles: platform monetization with fortress margins versus manufacturing leverage to the AI capex cycle. The subtle read-through is that Alphabet and TSMC are not just beneficiaries of AI demand; they are the toll collectors on the two least-disruptable layers of the stack, which means they should capture spend even if model winners rotate. That makes them structurally better positioned than the headline AI “picks and shovels” trade, because their revenue is attached to distribution and production bottlenecks rather than any single application winner.

The second-order effect is that TSMC’s upside is constrained less by demand than by supply discipline and geopolitics. If advanced-node utilization stays tight, pricing power can persist for multiple quarters, but any signal of capex overshoot in Arizona or a slowdown in hyperscaler orders would pressure sentiment quickly because the stock is already being treated as a high-confidence AI proxy. Alphabet’s risk/reward is more asymmetric on the downside: the market may still be underestimating how much AI can reallocate search economics over 12-24 months, even if near-term monetization remains intact and cloud margin expansion keeps cushioning the story.

The contrarian takeaway is that the “obvious” trade is to buy both and ignore valuation, but the cleaner expression is relative. Alphabet looks like the more mispriced quality asset if AI search cannibalization proves slower than feared, while TSMC is the higher beta earnings compounder that likely needs sustained AI capex to justify further multiple expansion. The IPO angle around SpaceX matters mostly as a sentiment catalyst: it can lift broad tech appetite, but it also raises the bar for capital allocation discipline across private-to-public growth names, especially those still unprofitable or narrative-driven.

Near term, the biggest reversal risk is not product weakness but multiple compression if rates back up or if AI enthusiasm broadens too far into speculative pre-profit stories. In that regime, profitable megacap AI enablers should outperform the IPO complex, and any weakness in Alphabet/TSM would likely be buyable only after a full reset in growth multiples.

Key Decisions for Investors

• Long GOOGL vs short a basket of speculative pre-profit AI/IPO names for 3-6 months; thesis is that durable cash-flow compounders will re-rate less aggressively on any AI enthusiasm fade, with better downside protection if market breadth narrows.
• Buy TSM on 2-4 week pullbacks only; target a 6-12 month hold. Risk/reward is favorable if AI capex remains firm, but size should be lower than GOOGL because the stock is more exposed to sentiment and geopolitical headline risk.
• Sell 1-2 month out-of-the-money covered calls on TSM if implied volatility spikes around AI/IPO headlines; monetize elevated premium while keeping upside if the stock grinds higher rather than gaps.
• Initiate a relative-value long GOOGL / short high-multiple internet search or ad-tech names if the market starts pricing in near-term search disruption too aggressively; this expresses the view that Alphabet’s moat remains underappreciated over the next 6-12 months.
• Avoid chasing SpaceX-related comps immediately post-IPO; wait for 30-45 days of trading history before considering any satellite or launch-adjacent exposure, since first prints may be driven by scarcity premium rather than fundamentals.