The AI leader TSMC is still at a low level!
The US stock market experienced a slight pullback yesterday, but semiconductors continued to surge. Among them, $NVIDIA Corp(NVDA)$ jumped 3.6%, with a market value exceeding $2.1 trillion, surpassing Saudi Aramco to become the third largest company in the world!
Apart from Nvidia, another AI leader is also expected to hit a new high, that is, $Taiwan Semiconductor Manufacturing(TSM)$ .
The market is well aware of the shortage of Nvidia's AI GPUs, but few funds pursue TSMC, the only manufacturer of GPUs for Nvidia.
Nvidia's H200 will be launched in the second quarter, and B100, adopting the Chiplet design architecture, has placed an order for tape-out. H200 and B100 will use TSMC's 4nm and 3nm processes, respectively. Some institutions pointed out that Nvidia's orders are strong, and TSMC's 3nm and 4nm capacity is almost fully loaded.
It's not news that TSMC manufactures for Nvidia. As early as in TSMC's fourth-quarter report, the company expected its revenue growth this year to reach 20%-25%, and the compound annual growth rate of revenue in the next few years to be 15%-20%.
This growth rate is completely comparable to the performance of historical semiconductor boom cycles:
Considering that AI GPUs adopt the most advanced production processes, and generally speaking, the more advanced the process, the stronger TSMC's profitability, it should deserve a higher valuation.
However, TSMC's current price-to-book ratio is still lower than that of 2021, without giving any AI premium:
AI is hailed as the fourth industrial revolution, with explosive performance and enormous appeal in terms of space. Coupled with AI phones and AI PCs expected to drive consumer electronics shipment growth, TSMC benefits not only from AI but also from the semiconductor boom cycle.
It's incredible that such an AI leader has not yet hit a new high, and its valuation is still far lower than that of the previous boom cycle!
Currently, TSMC's share price in Taiwan has already hit a new high, and the US-listed TSMC is just one step away from its historical high. Considering its valuation and earnings growth potential, TSMC's new high is just around the corner.
This bull market may even see it break through $200 high, the market value exceeded $1 trillion, becoming the second market value of over $1 trillion semiconductor company!
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