TSM
📈 Taiwan Semiconductor reported explosive Q1 2024 growth, with net income surging 60% and revenues up 35.3%, driven by high demand, particularly in AI-related high-performance computing.
🏭 The company boasts exceptionally strong margins (Gross: 59%, Operating: 48.5%, Net: 43%) and a high Return on Equity (33%), showcasing operational excellence despite high capital expenditures.
🌍 While possessing a formidable moat due to its technological lead (3nm chips) and high entry barriers, the stock faces significant geopolitical risks (China-Taiwan tensions, US policies) and trades at a valuation (15x P/E) considered reasonable but potentially vulnerable to market cycles.
@invertirdesdecasa:
“At the market close on April 17th, Taiwan Semiconductor closed at approximately $140 per share, giving the entire company a market value of $682 billion. Comparing the latest quarterly earnings report, Q1 2024, total revenues reached $25.5 billion, showing a 35.3% growth. Gross margins were nearly 59%, among the highest in the semiconductor foundry industry, reflecting spectacular year-over-year growth. This improvement extended to the operating margin, which reached 48.5%, an incredible figure for a capital-intensive company, indicating perfect cost minimization. The final net margin was 43%, and the return on equity was almost 33%. The company is practically the only one efficiently producing 3nm chips, fueling growth, especially from high-performance computing driven by AI demand from clients like Nvidia and AMD. Despite increasing capex, including investments in the US, free cash flows are growing. The company holds an enviable net cash position of $66 billion, despite huge capital investments, contrasting sharply with competitors like Samsung and Intel. Valued at $682 billion, with projected 2025 pre-tax earnings around $52 billion and net earnings of $44 billion (assuming a 16% tax rate), the stock trades at about 13 times pre-tax earnings or 15 times net earnings (P/E ratio). This 15x P/E seems reasonable for a cyclical semiconductor company, presenting both an interesting opportunity and a point of concern. The company’s moat is extremely strong; the probability of a startup successfully competing is very low due to immense capital requirements and technological hurdles, as even Intel struggles to match TSMC’s efficiency. However, significant geopolitical risks involving China, Taiwan, and the US, along with potential regulatory impacts and the cyclical nature of chip demand, pose considerable threats. While the long-term view suggests efficiency will prevail, short-term volatility is likely.”
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