To The Moon

🌟🌟🌟On a day when the markets are down, $Taiwan Semiconductor Manufacturing(TSM)$  beats market expectations on its Q1 24  earnings report.

TSMC's net revenue rose 16.5% year on year to NT592.64 billion while net income increases 8.9% year on year to NT225.49 billion.  TSMC Earnings Per Share was up 8.9% to USD 1.38 from previous year.  TSMC also reported a gross margin of 53.1% and an operating profit margin of 42%, down from 56.3% and 45.5% respectively from previous year. 

The results exceeded analysts' expectations for revenue of USD 18.4 billion and EPS of USD 1.32. 

TSMC is the world's largest producer of advanced processors chips and counts Nvidia and Apple as some of its clients.

TSMC currently produces 3 nanometer chips and plans to commence mass production of 2 nanometer chips in 2025.  Strong demand for AI chips led by the increase of large language models such ChatGPT and Gemini has caused TSMC shares to surge 51% last year.

However TSMC shares are falling this week.  It is currently down 4.8% and 8.9% in the past 5 days.  The reason for this is due to slower smart phone sales and TSMC now expects total growth of 10% year over year versus previous expectations of more than 10%.

TSMC shares were also dragged down by the overall negative sentiments in the markets.  Nvidia, AMD, Intel were also down for the week.

$Semiconductor Bull 3X Shares(SOXL)$  was down 5.8% today and dropped 19% in the past 5 days. SOXL is a leveraged ETF that provides 3x daily exposure to a meet cap weighted index of 30 US listed Semiconductor companies.  However SOXL is still up 24% year todate and in 2023 it jumped 128%.

Despite falling prices of TSMC, Wall Street Analysts are bullish with a Buy rating, Target price of USD 155.17, an upside potential of 15%.

Charles Shi of Needham, an analyst is even more bullish with a Target price of USD 168, an upside potential of more than 25%.

He said that TSMC's revenue growth is driven by steady introductions of new technology that are largely unaffected by industry cycles to remain strong and support 15 to 20% earnings CAGR over the next few years.  As such he recommends TSMC as a core holding for investors looking to buy Semiconductor stocks as the foundation of the expanding digital economy. 

I am bullish on TSMC too and believes that it is a Buy at the current prices.  This is just a temporary setback and TSMC will emerge stronger in the years to come. 

As Warren Buffett likes to say When there is fear in the markets it is time to be greedy. 

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