Recent market sales have created some beautiful offers on the market. One stock that looks particularly attractive is Taiwanese semiconductor product(Nyse: tsm)or tsmc briefly. The shares have been reduced by more than 20% of its recent top than this writing.
Let’s look at three reasons why TSMC had to look for long -term investors.
As the world’s largest contract, a semiconductor manufacturer, TSMC is an integral part of the industry chain. Today, most semiconductor companies do not produce their own chips; Instead, production produces products to third parties like TSMC. There are several reasons for that.
One is that the construction of Fabs (manufacturing drives for chips) is a capital intensive business-it costs a lot of money and time to do so. Second, in order for Fabsi to initiate profitability, they generally have to work at a rate of high capacity exploitation. And finally, there is a lot of complex technology that goes to the production of advanced chips, and the founders (FAB owners) are constantly pushing the envelope to make the chips smaller.
This is the last reason why TSMC has become so important for the semiconductor industry. Today is a leader in the technology of chip production, taking a large market share for advanced chips, such as those used in Artificial intelligence (AI) Infrastructure and high performance calculation (HPC). In the last quarter, 88% of the chips he produced was for HPC or smartphones, while 74% of his revenue was obtained from his more advanced technology using knots under 7 nanometers. The node is a specific generation of technology for the production of chips and generally corresponds to the size of the chip. Smaller nodes lead to more transistors that fit into the chip, leading to higher processing power and increased energy efficiency.
As TSMC pushed its technological leadership, the main founders of the foundry, Intelligence and SamsungThey fought. This led to the fact that TSMC not only becomes a manufacturer of chips for advanced chips, but also gave the company a significant price of prices. TSMC will increase prices again this year, further expanding its gross marginwhich allows more revenue to turn into profit.
Picture Source: Getty Image.
As a leader in advanced chip production, TSMC has a good benefit from an angry consumption on AI infrastructure and an increasing number of chips entering data servers. Counts top -notch chip designers like Nvidia,, Broadco,, Advanced micro devicesand Apple Among their customers.
As such, the company is progressing whether the Hyperscalers (organizations operated by large data centers) use NVIDIA graphic processing units (GPU) or are more turning to the use of adapted AI chips developed with Broadcoma. Either way, it wins.
Meanwhile, consumption on AI infrastructure is still growing. Three cloud computing companies are planning to spend Big on AI infrastructure this year, brought in with $ 100 billion USD capital expenditures directed to AI (Capex) Amazon80 billion dollars from Microsoftand $ 75 billion from Alphabet. AI start-up companies and other technological companies are also embarrassed. Meta platform He plans to spend up to $ 65 billion in AI CAPEX, while Openi will lead a group that will spend $ 500 billion in the US-building in the US within the next few years as part of Project Stargate.
For its part, TSMC continues to build new plants around the world to increase its capacity to help satisfy demand. The company has recently committed to spend an additional $ 100 billion during the next four years of building new Fabs and packaging facilities in the United States, as well as a new development center, bringing the total US investment to $ 165 billion.
TSMC is growing rapidly, with 37% revenue growth in US dollars and 39% in its local currency in the last quarter. Strong growth continued in the first quarter, and TSMC recorded 36% revenue growth in January and 43% in February (both in the local currency). In the meantime, his net income increased 57% in the local currency in Q4.
Despite strong growth and prospects, TSMC can still boast an attractive assessment. The shares are currently traded forward prices and earnings (P/e) of 19.5 times on the basis of analysts 2025 analysts. Even its price/earning and earning ratio (PEG) of 0.7 drops below a 1.0 threshold, which is often used to identify underrated stocks.
With an attractive assessment of values and bright prospects, TSMC is a solid stock for long -term investors that will increase during this market.
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Randa Zuckerberg, former director of the development of the market and spokeswoman for Facebook and sister of Meta Platform Executive Director Mark Zuckerberg, is a member of the Board of Directors Motley Fool. John Mackey, former Whole Foods Market CEO, Amazon Branch, is a member of the Board of Directors Motley Fool. Suzanne Frey, Executive Director of Alphabeta, is a member of the Board of Directors Motley Fool. Geoffrey Seiler has positions in the alphabet. Motley Fool has positions and recommends advanced micro devices, alphabet, Amazon, Apple, Intel, Meta platforms, Microsoft, Nvidia and Taiwan Semiconductor Manufacturing. Motley Fool recommends Broadcom and recommends the following options: Long January 2026 $ 395 calls to Microsoft, short January 2026. $ 405 calls to Microsoft and short may 2025. $ 30 calls to Intel. Motley Fool has disclosure rules.
