$Taiwan Semiconductor Manufacturing(TSM)$, the world's leading chipmaker, delivered a solid second quarter, exceeding expectations on both revenue and profit. This is great news for me. Here's why I'm staying bullish.
The key driver for TSMC's success is the explosive demand for advanced chips used in Artificial Intelligence (AI) applications. This demand is reflected in their 40% year-over-year revenue growth and their industry-leading 3-nanometer and 5-nanometer technologies.
While the outlook seems bright, there are challenges to consider. The recent news of Donald Trump’s remark on Taiwan's political situation is concerning. However, unlike meme stocks, TSMC's dominance in chip manufacturing is undeniable. They are the only company globally with the capability to produce the most advanced chips, making them a critical player for major tech companies like $Apple(AAPL)$ and $NVIDIA Corp(NVDA)$.
Another consideration is CEO C.C. Wei himself acknowledged the struggle to meet the overwhelming demand. TSMC is working to expand capacity, but tightness is expected to persist through 2025. This could potentially lead to price increases for consumers down the line.
TSM Daily Chart
TSMC's stock price did experience a slight drop recently, likely due to profit-taking and the aforementioned geopolitical jitters. However, in my view, this might be a buying opportunity for long-term investors who believe in the company's future potential.
While the short-term market sentiment might be shaky, I'm confident in TSMC's long-term prospects. Their dominance in the advanced chip market, fueled by the ever-growing demand for AI, positions them for continued success. The recent price dip might be a good entry point for those looking to add to their holdings.
Disclaimer: This is just my analysis, and the market is unpredictable. Do your own research before making any investment decisions. Consider both the technological advancements and the political aspects when evaluating TSMC's future.
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Comments
Go ahead bears tell me I'm wrong, Bulls Buy buy buy buy, it's lies its manipulated they want our shares I put all mine on a limit sale at ridiculous prices so they can't touch them.
What exactly does the market expect from TSM though? The guidance was raised and I believe it is more about the location than anything that caused the dip.
I’m up like 145% on my position and it trades at a high PE for it’s history. I love TSM but can’t justify getting more till it comes down a bit.
I am happy that it has rebounded, but on the other hand, I am disappointed that I could have made additional purchases at a lower point.
Nearly a trillion dollar company! This is not going anywhere! Huge buying opportunity for longs