Taiwan Semiconductor MFG. (TSM)

Semiconductor space is quite cyclical, so earnings won't necessarily be going up every single year at a consistent clip. At mercy of overall economy. ROE averaged between 22-30% over last 15 years, very strong return profile. Risk is geopolitical, difficult to quantify. Berkshire, for example, has sold its position.

Stock's gone parabolic, cause for pause or reassessment. At 26x PE, not incredibly expensive. Look to add 20% below where it is right now.

Right at analysts' price target. Running at 100+%. NVDA is one of TSM's biggest clients, so reporting today should be interesting. Don't sell, but could write some calls around $159-160 and get a good premium from the volatility; keep track so you don't get traded out of your position.

Buy. Great numbers lately. Huge amount of orders. 

Largest chip manufacturer in the world. AI play, by far the leader in manufacturing. Several years ahead of competition. Looking at earnings growing by 50% over the next 2 years. Trades at 20x earnings, 15x next year's. Extremely cheap. Yield is 1.6%.

They report tomorrow. Doesn't expect surprises, because you can follow their monthly numbers and the company tells you often how they're doing. He's comfortable with it.

It reports next week. Earnings should be pretty good, because they have no spare capacity, but the market already expects this and it's reflected in the share price.

Bottleneck in packaging of new generation AI chips. Leading contract manufacturer for AAPL, NVDA, and AMD.  Weakness in smartphone area, but strength in AI applications. Should see AI growth for next 5 years. Then, potential for cyclical rebound on smartphone side. Not expensive. A few levers to pull for EPS upgrades throughout the year. Yield is 1.5%.

He holds a large position that's done well. His big concern is their exposure to China given fears of a Taiwan invasion; TSI has a lot of production in China. It's still reasonably price and can't keep up with orders. Shares will keep rising.

Up 53% in the past 12 months, but he prefers ASML and other companies that make semis production equipment, not the semis themselves. He likes TSM despite geopolitical risk. Everything comes through ASML.

Core holding. Not in his top 5, but certainly in his top 10. Very tradeable, but you have to watch the whole semiconductor ecosystem. Cutting-edge equipment. Controls around 54-55% of the semi manufacturing.

He recently took some profits after shares popped 50% since Q4 which is an unusual move; this became too big a position.

Nvidia is a client of theirs. TSM makes all AI chips. A great company that's had a great ride. If you believe China will invade Taiwan, look at Samsung. TSM is best of breed. But the semis sector is overheated now and there will be moderation coming. Also, AI will be driven by software. 

It's broken above its 2022 high, but has gained only 3.71% over 3 years. If you missed Nvidia, don't go down the food chain. Buy the best (Nvidia) if you like this space.

Good way to play AI through its chips. Massive operating leverage to AI.