Taiwan Semiconductor MFG. (TSM)

Reports tomorrow, so don't do anything today. The report should be very decent. Slow moving, but king of the foundries (80-90% market share). See how the earnings land, and then you can buy on dips. Previous high is ~$380 -- if it closes the end of the week above that, add then.

The valuation is too high, but he owns and likes it. Long term, the hyperscalers will make their own chips. If the market keeps expanding, it may not impact Nvidia as much as people think. But there are only so many companies who make chips, and TSM is the number one. At 26x PE and 2% free cash flow doesn't provide enough margin of safety.

It is the backbone of the AI revolution as the maker of advanced chips that power AI and in fact makes more than 90% of the world's advanced semi-conductors. Has big name customers like NVIDIA, Apple, etc. It will drive the next leg of growth in the space and is one of his stronger names in his portfolios. Is at full production capacity. At the upcoming conference he would like to see more information on backlogs which presently carry into 2028. Its 2026 revenue is expected to be $155 billion US. and revenue growth should be in the high double digits. Also its technical chart is better. Has a facility in Arizona so will benefit from on-shoring.                  Buy 30  Hold 1  Sell 0

Cornerstone of all things AI. 72% market share. Trades at a discount to its customers, even though it does the hardest work and has a monopoly on future of innovation. Growing 20-40% consistently in next few years. 

Good choice as part of a diversified portfolio. Yield is 1.19%.

A geopolitical question. He thinks the risk is much less. Another record quarter, profits up 35%. Robust chip demand. Guided up to 38% YOY profit growth. PE of 19x, growth of 17%. Can probably buy at these levels.

The chart shows an uptrend. Nothing wrong with this stock. A sharp move up in the past year, which could pull back, but nothing wrong here.

His go-to name. Regardless of who's designing them, advanced chips are made only by a few people. Very rich multiple here. Used to be able to buy it cheaply because of its location's geopolitical risk, but no longer. PE of 30x with phenomenal growth.

Chip manufacturing is a very tough business. Historically, a cyclical business. The best of the best. A generalist, with cutting-edge AI chips.

He has more comfort owning a TSM than an NVDA. It means he doesn't have to bet on which horse is going to win the race, but owns the racetrack instead. Much cheaper valuation. Comes with Taiwan-China risk, but no company is immune from any risk. 

Attractively positioned in the value chain, as it's on the foundry side producing chips for designers. Benefits no matter who gains traction. Valuation a bit ahead of itself. Better value in other spots across the value chain. Still upside to earnings, but not enough for her to be interested.

Are the most important semiconductor factory. They don't design, but make those chips. They are always sold out for manufacturing. Has dominant market share.

It reports Thursday, and it should be a monster quarter. Problem is, everyone knows that. Shares have been weak despite a steady stream of good news. 

The biggest risk is a Chinese invasion, but he owns Alibaba which operates in China. TSM is growing cash flow as EBITDA, revenues and operating income all are growing at 20% while EBITDA multiple is 11-12x (much lower than Nvidia) and PE is 20x. Earnings are much more predictable than Nvidia's. It's his largest position.

The winner in AI is really TSM, because they make the chips for both companies and Broadcom. TSM sells at 19x PE and 13x EBITDA whereas Broadcom's multiples are ridiculously high. He doesn't see China taking over Taiwan.