Core Viewpoint - Long-term investing in Taiwan Semiconductor Manufacturing (TSMC) is recommended due to its strong market position, continuous innovation, and substantial growth potential. Group 1: Company Strengths - TSMC is the world's leading contract chip manufacturer with a strong client base including major companies like Nvidia and Apple, making it difficult for clients to replace TSMC as a supplier [3] - The company has a culture of continuous innovation, with upcoming launches of 2 nanometer chips later this year and 1.6 nanometer chips in 2026, positioning TSMC as a leader in advanced technology [4] - TSMC achieves high chip yields of 90% or greater, significantly outperforming competitors who struggle with yields around 50%, which enhances its competitive edge [5] Group 2: Risk Mitigation - TSMC is diversifying its production facilities globally, investing $165 billion in the U.S. and establishing facilities in Japan and Germany to reduce risks associated with its proximity to mainland China [6] - The potential threat from China is mitigated by TSMC's global customer base, making a market crash unlikely in the event of geopolitical tensions [7] Group 3: Growth Projections - TSMC's management anticipates a 45% compound annual growth rate (CAGR) in AI-related revenue and nearly 20% CAGR in total revenue over the next five years, indicating strong growth prospects [8] - The long-term outlook remains positive due to the increasing demand for technology, ensuring continued demand for TSMC's chips [9] Group 4: Financial Performance - TSMC consistently achieves profit margins greater than 40%, resulting in substantial cash flows for reinvestment, stock repurchase, or dividends [10][12] - The company offers a solid dividend yield of 1.2%, which has been consistently increased over the years, contributing to the investment thesis [13][15] - TSMC's stock is trading at 24.9 times forward earnings, which is comparable to the broader market's 23.2 times, making it a fair investment given its growth potential [16][18]

Core Viewpoint - The $1 trillion stock club is shrinking due to market sell-offs, with only eight companies currently holding this valuation, but Taiwan Semiconductor and Broadcom are poised to rejoin soon if the market recovers [1][2]. Group 1: Company Valuations - Taiwan Semiconductor is currently valued at approximately $770 billion, while Broadcom is valued at around $800 billion, indicating a 25% increase is needed for both to reach the $1 trillion mark [3]. - Both companies are expected to return to the $1 trillion valuation club within the next year or two [2][6]. Group 2: Taiwan Semiconductor (TSMC) - TSMC is the largest chip foundry globally, producing chips for major clients like Nvidia, Apple, and Broadcom, which allows it to maintain a neutral position in the market [4]. - TSMC is advancing its technology with the introduction of 2 nm and 1.6 nm chips, following its current 3 nm technology, which enhances its competitive edge [5]. - The CEO of TSMC expressed confidence in achieving a revenue increase of nearly mid-20s percent in U.S. dollar terms for the full year 2025, despite potential tariff uncertainties [5][6]. Group 3: Broadcom - Broadcom is developing custom AI accelerators, known as XPUs, which are alternatives to Nvidia's GPUs, targeting specific workloads and potentially capturing market share from Nvidia [7][8]. - The addressable market for Broadcom's XPUs is projected to be between $60 billion and $90 billion by 2027, with significant growth expected as new clients adopt these products [9]. - Broadcom's trailing 12-month revenue stands at $54.5 billion, and growth from the XPU segment could significantly enhance its overall revenue [9]. Group 4: Investment Opportunities - Both TSMC and Broadcom are currently viewed as attractive investment opportunities due to their lower forward price-to-earnings ratios compared to recent months [11]. - Despite Broadcom having a slightly higher premium, both companies are considered to offer great value for investors looking for long-term returns [13].