Investment Rating - The report maintains a "Buy" rating for several companies in the tech hardware and semiconductors sector, including ASE, Hon Hai Precision, MediaTek, and TSMC, among others [8]. Core Insights - The outlook for AI adoption remains strong, with significant momentum in enterprise AI, leading to supply constraints for major customers [2][3]. - TSMC aims to double its CoWoS capacity year-over-year in 2025, despite facing gross profit margin dilution due to overseas expansion [3]. - Samsung reports robust memory demand, particularly from PC and smartphone sectors, supporting DDR pricing [4]. - The report highlights a value bias within the APAC tech sector, indicating a preference for certain stocks over others [5]. Summary by Sections AI and Technology Hardware - AI-related developments are driving enterprise adoption, with Microsoft noting strong demand from large customers [2]. - The ramp-up of Blackwell rack assembly is on track, with Quanta expecting to meet server test cycle targets by the end of Q2 2025 [2]. Semiconductor Industry - TSMC's gross margin is negatively impacted by NTD appreciation against USD, with a 40-basis point decline for every 1% appreciation [3]. - MediaTek maintains its Q2 gross margin guidance at 47% despite foreign exchange pressures [3]. - ASE targets $1.6 billion in revenue from advanced packaging and testing in 2025, up from $600 million in 2024 [30]. Market Dynamics - Samsung anticipates strong demand for memory products, which is expected to support pricing in the DDR segment [4]. - The report notes a potential decline in revenue for certain ICs, indicating a cooling off from earlier pull-ins [3]. Company-Specific Insights - ASE is focused on expanding its advanced packaging and testing business, targeting significant revenue growth [30]. - MediaTek is aggressively pursuing the N2 process migration, with expectations of reaching $1 billion in cloud ASIC revenue by 2026 [39]. - Quanta's server business is expected to grow, with AI servers making up a significant portion of sales [24]. Preferred Companies - The report lists preferred companies in the APAC tech sector, highlighting those with strong growth potential and favorable valuations [8].

Core Viewpoint - TSMC is projected to achieve "record profit" in 2025, with CEO C.C. Wei expressing confidence in the company's growth despite potential tariff impacts [1][3]. Group 1: Company Growth and Market Demand - TSMC anticipates continued sales growth in the mid-20% range, driven by high demand for artificial intelligence applications and emerging markets such as humanoid robots [4]. - The company believes that even if U.S. demand for semiconductors decreases due to tariffs, alternative buyers will sustain overall demand [3]. Group 2: Financial Performance and Stock Valuation - TSMC reported a profit of $39.4 billion over the past year, but its free cash flow (FCF) was only $27.3 billion, indicating a cash profit of approximately $0.69 for each $1 in claimed profit [5][6]. - The company's price-to-earnings (P/E) ratio is 24, which appears attractive compared to its growth rate, but the price-to-free-cash-flow ratio exceeds 31, suggesting that TSMC stock may still be considered expensive [5][6].

Group 1: Stock Performance - TSMC closed at $197.61, with a +1.42% change from the previous day, outperforming the S&P 500's daily gain of 0.58% [1] - Over the past month, TSMC shares gained 10.45%, surpassing the Computer and Technology sector's gain of 7.05% and the S&P 500's gain of 4.61% [1] Group 2: Earnings Expectations - TSMC is expected to report EPS of $2.29, reflecting a 54.73% increase from the prior-year quarter, with projected net sales of $29.66 billion, up 42.47% from the year-ago period [2] - For the full year, earnings are projected at $9.19 per share and revenue at $115.46 billion, indicating changes of +30.54% and +28.17% from the preceding year [3] Group 3: Analyst Estimates and Rankings - Recent adjustments in analyst estimates for TSMC are crucial as they reflect short-term business trends, with a 2.09% rise in the Zacks Consensus EPS estimate over the past month [3][5] - TSMC currently holds a Zacks Rank of 3 (Hold), with the Zacks Rank system showing an average annual return of +25% for 1 ranked stocks since 1988 [5] Group 4: Valuation Metrics - TSMC has a Forward P/E ratio of 21.2, which is in line with the industry average [6] - The company also has a PEG ratio of 1.02, matching the average PEG ratio of the Semiconductor - Circuit Foundry industry [7] Group 5: Industry Context - The Semiconductor - Circuit Foundry industry is part of the Computer and Technology sector and holds a Zacks Industry Rank of 91, placing it in the top 37% of all industries [8]

Core Insights - Taiwan Semiconductor Manufacturing Company (TSM) has achieved a 12.6% stock gain over the past three months, outperforming the broader Zacks Computer and Technology sector, which rose 4.4% [1] - TSM's stock performance has surpassed several peers, including ASML Holding, Lam Research Corporation, and Marvell Technology, with Marvell experiencing a significant decline of 28.4% [2] - Investor confidence in TSM's long-term prospects is increasing, supported by strong fundamentals and a favorable long-term outlook [3] AI-Driven Growth - TSM is benefiting from the AI revolution, leading the global chip foundry market and becoming a key partner for advanced chipmaking for major companies like NVIDIA and Broadcom [5] - AI-related revenues tripled in 2024, contributing a mid-teen percentage to TSM's total revenues, with expectations to double again in 2025 and a projected 40% compound annual growth rate over the next five years [6] Financial Performance - In the first quarter of 2025, TSM reported a 35% year-over-year revenue increase to $25.53 billion and a 53% rise in net income to nearly $11 billion, driven by demand for advanced 3nm and 5nm nodes [7] - The first-quarter EPS increased by 53.6% to $2.12, exceeding the Zacks Consensus Estimate of $2.03, with an average surprise of 6.9% over the last four quarters [8] Capital Expenditure Plans - TSM plans to increase capital expenditures to between $38 billion and $42 billion in 2025, up from $29.8 billion in 2024, with around 70% allocated for advanced manufacturing capabilities [10] Valuation and Investment Strategy - Despite strong growth, TSM's stock is reasonably priced, trading at a forward P/E multiple of 19.96X, lower than the sector average of 25.52 [11] - TSM's P/E ratio is also lower than peers like ASML, Lam Research, and Marvell Technology, reinforcing the case for holding the stock [12] Short-Term Challenges - TSM faces near-term challenges, including higher energy prices in Taiwan due to a 25% electricity hike in 2024, which could impact advanced node production [13] - Softness in key markets such as PCs and smartphones is expected to limit growth, with projected low single-digit growth in 2025 [14] - The company's global expansion strategy, including new fabs in the U.S., Japan, and Germany, may strain gross margins due to higher costs and lower utilization rates initially [15] - Geopolitical tensions, particularly U.S.-China relations, pose strategic risks, with potential impacts from export restrictions and supply-chain disruptions [16] Conclusion - TSM remains a cornerstone of the semiconductor industry, with strong capabilities in advanced chip manufacturing and significant exposure to AI demand, but short-term headwinds necessitate a cautious investment stance [19]

Group 1 - Taiwan Semiconductor Manufacturing Company (TSMC) is recognized as a crucial component of the global chip supply chain, significantly contributing to advancements in AI, smartphones, and high-performance computing (HPC) [1] - Pythia Research focuses on identifying multi-bagger stocks in the technology sector, utilizing a blend of financial analysis, behavioral finance, and alternative metrics to uncover high-conviction investment opportunities [1] - The investment strategy emphasizes understanding market sentiment and psychological factors that drive stock movements, rather than solely relying on fundamental analysis [1] Group 2 - The approach taken by Pythia Research involves analyzing investor behavior and market inefficiencies, which can lead to significant investment opportunities during periods of volatility [1] - The firm seeks to identify companies that are redefining their categories and have unconventional growth paths, often overlooked by the market [1] - Each investment opportunity is assessed based on its risk/reward profile, aiming for limited downside and substantial upside potential [1]

Core Viewpoint - TSMC anticipates record earnings in 2025 driven by increased semiconductor production capacity to meet high demand for AI technology [1][2] Group 1: Financial Performance - TSMC's chairman CC Wei stated that revenue and profit for the year are expected to set new historical highs [2] - The company reported sales of NT$349.6 billion (approximately US$11.6 billion) for April, marking a 48.1% increase year-over-year and a 22.2% increase from March [4] Group 2: Production Capacity and Demand - TSMC is increasing production capacity to satisfy the very high demand for AI technology [2] - The company has been under pressure to diversify production locations away from Taiwan due to geopolitical concerns, particularly regarding China [3] Group 3: Geopolitical Context - TSMC has initiated plans for new fabrication plants in the United States, Europe, and Japan to mitigate risks associated with its primary operations in Taiwan [3] - There are rumors about TSMC considering building an advanced facility in the United Arab Emirates, which the chairman dismissed as speculation [4] Group 4: Impact of Tariffs - US tariffs have had some indirect impact on TSMC, but the company remains optimistic about its AI business [2][6] - Despite concerns over potential tariffs affecting chip prices and demand, the company believes its business will remain strong [6][7]

Core Viewpoint - Wall Street's prominent billionaire fund managers, including Stanley Druckenmiller and Stephen Mandel, have sold their Nvidia shares in favor of Taiwan Semiconductor Manufacturing Company (TSMC), which is crucial for enterprise AI data centers [8][9][20]. Group 1: Nvidia's Market Position and Recent Actions - Nvidia has been a significant beneficiary of the AI revolution, with its market capitalization increasing by over $3 trillion from early 2023 to late 2024 [10][13]. - Druckenmiller and Mandel completely divested their Nvidia holdings, with Duquesne Family Office holding 9,500,750 shares and Lone Pine Capital holding 6,416,490 shares as of June 2023 [11][12]. - The decision to sell Nvidia may be attributed to profit-taking, as well as concerns over increasing competitive pressures in the AI-GPU market [13][14]. Group 2: Competitive Landscape and Risks for Nvidia - Competitors are ramping up production of energy-efficient hardware, posing a threat to Nvidia's pricing power and market share [15]. - Many of Nvidia's top customers are developing their own AI-GPUs, which could be cheaper and more readily available than Nvidia's offerings [15]. - Historical trends indicate that new technologies often experience bubble-bursting events, raising concerns about Nvidia's long-term sustainability in the AI market [16][17]. Group 3: TSMC's Strategic Position and Growth Potential - TSMC has become the new focus for Druckenmiller and Mandel, with Duquesne increasing its stake by 491,265 shares and Lone Pine purchasing 104,937 shares in the first quarter of 2025 [20]. - TSMC is expanding its chip fabrication capacity significantly, from approximately 35,000 units monthly in 2024 to an estimated 135,000 units by 2026 [21]. - The company's net sales from high-performance computing surged from 46% to 59% year-over-year, indicating strong demand for its services [22]. Group 4: Diversification and Stability of TSMC - TSMC's revenue diversification includes 28% of net sales from advanced chips used in smartphones, providing predictable cash flow [24]. - The company has opportunities in the Internet of Things and automotive sectors, as technology dependence in homes and vehicles increases [25]. - The dip in TSMC's stock price during the first quarter made its valuation attractive compared to Nvidia, with a forward price-to-earnings ratio of nearly 15 [26].

Group 1 - The article discusses the geopolitical landscape between China and the U.S., indicating that it is not a simple stalemate, despite market fears [1] - Oliver Rodzianko is the Founder and CEO of Invictus Origin, an investment management firm launched in May 2025, focusing on high-alpha strategies [1] - Invictus Origin's flagship portfolio, the Nasdaq High-Alpha Black Swan Portfolio, aims to outperform the Nasdaq-100 while maintaining approximately 20% in cash reserves for downside protection [1] Group 2 - Oliver Rodzianko has extensive experience as a macro-focused investment analyst, specializing in sectors such as technology, semiconductors, artificial intelligence, and energy [1] - The investment process at Invictus Origin integrates U.S. market specialization with a comprehensive understanding of international markets [1] - The firm aims to deliver durable outperformance by navigating market dislocations and intrinsic value cycles [1]

Core Insights - TSMC shareholders have experienced significant volatility in share prices, primarily due to rising trade protectionism and uncertainties surrounding the sustainability of AI capital expenditures [1] Group 1: Market Conditions - Concerns over escalating trade protectionism have negatively impacted TSMC's stock performance [1] - Questions regarding the sustainability of AI capital expenditure have contributed to the decline in TSMC shares [1] Group 2: Investment Perspective - The focus is on identifying market asymmetries that offer a positive reward-to-risk ratio, particularly in high-quality, wide-moat companies that generate strong cash flow [1]

Group 1 - TSMC's stock closed at $196.14, reflecting a decrease of -0.78% from the previous day, underperforming compared to the S&P 500, Dow, and Nasdaq indices [1] - Over the last month, TSMC's shares have increased by 20.18%, outperforming the Computer and Technology sector's gain of 11.21% and the S&P 500's gain of 7.37% [1] Group 2 - TSMC is expected to report an EPS of $2.29, which represents a 54.73% increase from the same quarter last year, with projected revenue of $29.66 billion, reflecting a 42.47% rise [2] - For the annual period, the consensus estimates anticipate earnings of $9.19 per share and revenue of $115.46 billion, indicating increases of +30.54% and +28.17% respectively from the previous year [3] Group 3 - Recent modifications to analyst estimates for TSMC indicate shifting business dynamics, with positive revisions suggesting an optimistic outlook for the company [4] - Changes in estimates are believed to correlate with upcoming stock price performance, and the Zacks Rank system provides an actionable rating based on these changes [5] Group 4 - TSMC currently holds a Zacks Rank of 3 (Hold), with a consensus EPS projection that has increased by 2.07% in the past 30 days [6] - The company has a Forward P/E ratio of 21.51, which aligns with the industry average, and a PEG ratio of 1.03, consistent with the Semiconductor - Circuit Foundry industry's average [7] Group 5 - The Semiconductor - Circuit Foundry industry ranks in the top 37% of all industries, with a Zacks Industry Rank of 90, indicating strong performance potential [8]