Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's revenue for Q3 2024 increased by 39% year-on-year, with net profit and diluted earnings per share both rising by 54% [1] - For Q3 2024, revenue reached $23.5 billion, representing a 36% year-on-year growth and a 12.9% quarter-on-quarter increase [1] - The strong performance in Q3 2024 was primarily driven by demand from smartphones and AI-related sectors, particularly from the leading 3nm and 5nm technologies [1] Financial Performance - Revenue for 2023 was NT$2,161,736 million, with a projected increase to NT$2,876,265 million in 2024, reflecting a year-on-year growth of 33.05% [2] - Net profit for 2023 was NT$838,498 million, expected to rise to NT$1,172,772 million in 2024, indicating a year-on-year growth of 39.87% [2] - The company’s gross margin for Q3 2024 was 57.8%, up from 53.2% in Q2 2024, while operating margin was 47.5% compared to 42.5% in Q2 2024 [1] Future Outlook - Management expects Q4 2024 revenue to be between $26.1 billion and $26.9 billion, with gross margin projected between 57% and 59% [1] - The contribution from 3nm and advanced technologies accounted for 69% of total wafer revenue in Q3 2024 [1] - The company anticipates that revenue from server AI processors will triple in 2024, contributing to a mid-teens percentage of total revenue [1] Regional Contribution - In Q3 2024, North American customers contributed 71% of total revenue, while China, Asia-Pacific, Japan, and EMEA contributed 11%, 10%, 5%, and 3% respectively [1]

Group 1: Nvidia's Growth and Market Position - Nvidia reached a market capitalization of $1 trillion in May 2023, driven by increased spending on artificial intelligence, and has since tripled in value, becoming the second most valuable company globally after Apple [1] - The company is part of a larger ecosystem of "hyperscalers" that are expanding data centers for generative AI, highlighting its critical role in the supply chain [1] Group 2: Taiwan Semiconductor Manufacturing Company (TSMC) Overview - TSMC has become the newest member of the $1 trillion club, recognized for its advanced technology and significant market share, capturing over 60% of industry spending [3] - TSMC reported a 39% year-over-year revenue growth in Q3, with gross margins increasing to 57.8% and net income rising by 54.2%, showcasing its technological leadership [3][4] Group 3: Future Growth Potential - TSMC anticipates that revenue from AI chips will more than triple in 2024, although this segment will only represent a mid-teen percentage of total revenue, indicating substantial growth potential in AI [5] - The company is increasing its capital expenditures to over $30 billion for 2024 and plans to invest even more in 2025, alongside an 11.4% year-over-year increase in R&D spending [6] Group 4: Competitive Advantage and Market Outlook - TSMC's position as the largest foundry allows it to invest more in technology and machinery, maintaining its competitive edge and strong relationships with major customers [6] - The stock has more than doubled in 2024, trading at just over 25 times analysts' estimates for 2025 earnings, with potential for continued growth at a rate around 20% over the next five years [7] - TSMC is well-positioned to capture a significant share of the chip manufacturing market, regardless of which companies are designing the chips, due to its established virtuous cycle of technological advancement and customer relationships [8]

Investment Rating - The report maintains a "Buy" rating for the company [2][4]. Core Insights - Q3 performance exceeded expectations, with revenue guidance for 2024 revised upwards. The company reported Q3 revenue of NT$759.7 billion (YoY +39.0%, QoQ +12.8%), surpassing the consensus estimate of NT$750.6 billion. Net profit attributable to shareholders was NT$325.3 billion (YoY +54.2%, QoQ +31.2%), also exceeding the consensus estimate of NT$298.4 billion. This strong performance was driven by increased wafer shipments and average prices, with Q3 shipments reaching 3,338 thousand equivalent 12-inch wafers (YoY +15.0%, QoQ +6.8%) [1][2]. - Strong demand for AI is driving growth, with the N3 process accounting for 20% of wafer revenue for the first time. High-performance computing contributed 51% of wafer revenue (YoY +9 percentage points, QoQ -1 percentage point). Management estimates that revenue from AI processors (data center GPUs, AI accelerators, CPUs) will triple compared to last year, expected to account for about 15% of total revenue. The company is well-positioned to benefit from the growing demand for advanced process foundry services [1][2]. - Key competitors are facing bottlenecks, solidifying the company's advantages in advanced processes and packaging. Competitors like Intel and Samsung are undergoing strategic adjustments, with Intel reducing its 2024 capital expenditure by over 20% and Samsung considering delays in purchasing lithography machines due to issues at its Texas plant. The company is expected to continue gaining outsourcing orders from competitors and improve bargaining power with upstream and downstream partners [1][2]. Financial Summary - Revenue projections for 2024-2026 are NT$28,757 billion, NT$36,715 billion, and NT$43,580 billion, respectively, with net profits of NT$11,704 billion, NT$15,505 billion, and NT$18,597 billion [3][4]. - Key financial metrics include a projected gross margin of 56% in 2024, increasing to 58% by 2026, and a return on equity (ROE) of 27% in 2024, reaching 28% by 2026 [3][5].

I'm specialized in fundamental equity research, global macro strategy, and top-down portfolio construction. I graduated from UCLA with a degree of Business Economics and UMich Ross School of Business with a Master of Accounting. I'm a senior analyst at a multi-strategy hedge fund. In my opinion, HODL can't generate significant alpha or maintain a high Sharpe ratio over the long run. Seeking Alpha requires active management and minimizing opportunity costs. Investors should understand seeking a high positive ...

Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) is experiencing a recovery attempt after significant losses of nearly -10% prior to the earnings report [1] Group 1 - The stock was previously attempting to recover from significant declining losses [1]

Group 1: Nvidia's Market Position and Performance - Nvidia holds a dominant position in the data center GPU market with an estimated 98% market share in 2023, crucial for AI applications [1] - The company has experienced significant growth, adding approximately $3 trillion in market capitalization since the launch of ChatGPT, with stock prices increasing nearly 1,000% [1] - Demand for Nvidia's chips continues to exceed supply, with the new Blackwell platform sold out for the next 12 months, indicating "insane" demand according to CEO Jensen Huang [1] Group 2: Risks Facing Nvidia - Nvidia faces competition from Advanced Micro Devices (AMD), which has launched the MI325X accelerator to challenge Nvidia's offerings [2] - Major customers like Amazon, Microsoft, and Meta Platforms are developing their own chips, potentially reducing their reliance on Nvidia [2] - Investor skepticism exists regarding the sustainability of the AI boom, with concerns about profitability and the cyclical nature of Nvidia's business [2] Group 3: TSMC's Market Position and Performance - Taiwan Semiconductor Manufacturing Corporation (TSMC) is the largest semiconductor manufacturer globally, handling over 50% of contract chip manufacturing and holding around 90% market share in advanced chips [4] - TSMC reported a 39% increase in revenue to $23.5 billion, with net income rising 54% to $10.1 billion, showcasing strong demand for its 3nm and 5nm technologies [5] - The company provided fourth-quarter revenue guidance of $26.1 billion to $26.9 billion, reflecting a 35% year-over-year increase at the midpoint [5] Group 4: Competitive Advantages of TSMC - TSMC benefits from a significant competitive advantage due to its dominant market share and expertise in advanced chip manufacturing [4] - The company is positioned favorably as rivals like Intel and Samsung are facing challenges, with Intel restructuring and Samsung reporting weak results [6] - TSMC's stock is considered affordable with a P/E ratio of 36, despite its faster growth compared to other tech giants [6] Group 5: Investment Considerations - While Nvidia remains a strong company, TSMC presents a lower-risk investment opportunity with a cheaper valuation and entrenched competitive advantages [7] - TSMC is recommended as a solid choice for investors looking to enter the AI stock market [7]

Mid-October brought a flurry of earnings results from major semiconductor firms like Taiwan Semiconductor Manufacturing Co. NYSE: TSM and ASML Holding N.V. NASDAQ: ASML, plus reports from several big banks, Netflix Inc. NASDAQ: NFLX, American Express Co. NYSE: AXP, and many others. This quarterly check-in allows investors to gauge how these and other firms have performed over the last several months. As always, investors have watched to see whether there are any surprises, including top- or bottom-line perf ...

Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool. ...

Taiwan Semiconductor Manufacturing Company (NYSE: TSM), the world’s largest contract chipmaker, continues to make waves in the semiconductor industry with its remarkable performance in the third quarter of 2024.The company reported a year-over-year profit surge of 54%, further cementing its leadership in the global market. Currently trading at $201.4, with a 6% gain over the last five days, TSMC’s robust earnings and strategic partnerships are fueling its rise.TSMC five-day price chart. Source: Google Finan ...

Needham analyst Charles Shi maintained Taiwan Semiconductor Manufacturing Company TSM with a Buy and raised the price target from $210 to $225.The re-rating followed Taiwan Semiconductor’s upbeat quarterly print Thursday.Shi said that Taiwan Semiconductor’s third-quarter print showed a much more robust performance of 3nm primarily due to Apple Inc AAPL.Also Read: What’s Going On With Nvidia Stock On Friday?In contrast, the analyst says 5nm revenue is leveling off after six consecutive quarters of strong seq ...