TSMC: Hot AI Demand Meets Capacity Crunch And Margin Erosion - Time To Take Profits?

Core Viewpoint - The bullish perspective on Taiwan Semiconductor Manufacturing Company Limited (TSMC) is supported by its strong stock performance compared to the S&P 500, indicating a positive investment outlook [1]. Group 1: Investment Strategy - The investment approach focuses on generating alpha by analyzing various sectors with perceived potential against the S&P 500, with typical holding periods ranging from a few quarters to multiple years [1]. - Comprehensive spreadsheets are maintained to track historical financial data, key metrics, guidance trends, and valuation comparisons with peers, which aids in informed decision-making [1]. Group 2: Research Methodology - The research methodology emphasizes assessing a company's historical performance and outlook on five key drivers of DCF valuation: revenues, costs and margins, cash flow conversion, capital expenditures, and interest rates, rather than projecting long-term financials [1]. - The analysis includes monitoring industry news, reports, and other analysts' coverage, especially during significant events like CEO changes, to understand leadership impact [1].