The stock hit an all-time high yesterday and is about to join the trillion-dollar club.
It has significantly outperformed the US stock market, with a remarkable 39.62% increase last year and an impressive 79.45% gain so far this year. In comparison, the $S&P 500(.SPX)$ rose by 24.23% last year and 16.84% year-to-date.
Curious about which stock this is? Let's find out!
Congratulations to Our Top Performers
@changs55 for achieving an impressive 112.82% return on buying $Taiwan Semiconductor Manufacturing(TSM)$. 👏👏👏
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@Syang1986 for achieving an impressive $19,032 return on buying $Taiwan Semiconductor Manufacturing(TSM)$. 👏👏👏
We also invite all of you to share your experiences with this trade with everyone. 💪
The company is going to report again on July 18th.
$Taiwan Semiconductor Manufacturing(TSM)$ will report its earnings on July 18th.
Capacity Expansion to Meet the AI Hype Demand
TSMC is expanding its AI chip production to meet surging demand. They are increasing capacity in Taiwan and globally, currently supporting around 80% of customer needs. Investments in Chiayi plants aim to resolve shortages by 2026, and new facilities in Miaoli and Tongluo Science Park will further boost production. Additionally, advanced packaging capabilities are being added to Arizona plants, and new wafer technology is being explored to increase volume by 300%. These efforts position TSMC for significant growth, driven by AI chip demand.
Pricing Leverage Should Increase Top-line Potential
TSMC is considering raising prices for its AI chips, which is overdue given Nvidia's explosive growth. With significant leverage, TSMC is in a strong position to implement substantial price hikes beyond the modest 5% initially considered. Nvidia's success hinges on TSMC's technological expertise, making it unlikely for Nvidia to switch manufacturers. As Nvidia accounts for around 10% of TSMC's total revenues, a strategic price increase could significantly enhance TSMC's top-line potential.
Fun facts
The company’s total Cash and equivalents stood at an impressive $60B, which is not far behind companies that have a market capitalization over at least $1T. Companies like $Amazon.com(AMZN)$ with a $2T market cap have around $85B in cash, $Apple(AAPL)$ with $67B in cash at over $3T market cap, or $Microsoft(MSFT)$ with around $80B in cash and similar market cap to Apple.
The company’s cash pile easily covers the company’s outstanding long-term debt, while interest expense is dwarfed by interest income, so there is no need to even pay back the debt outstanding, which stood at around $30B.
With the earnings report coming up, what is your trading strategy?
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