Taiwan Semiconductor MFG. (TSM)

They benefit from Nvidia's capex spending. Nvidia receives orders from the hyperscalers and so orders more from Taiwan Semi, which is safer and much cheaper than NVDA. That's why it's larger position for him than NVDA.

Like the other semis, TSM is now seeing profit-taking. It's best of breed in semis and is well-positioned going forward. Samsung is another choice, which he thinks has better growth.

Expectation that generative AI spending, by way of building out data centres, is going to be very robust through 2030. This is a way to play, 100%. Stock's done well, has pulled back with the others. Well positioned going forward.

Rhetoric going into the election about Taiwan and China, so could be more weakness.

Very expensive to build large, advanced fabs. We're talking $5-10B a pop. Now building fabs in Arizona. It's lead would be very hard to catch. 

They've had a monster run. Nvidia would like more capacity from TSM, so TSM is in the position to raise prices. A great holding and not expensive.

In general, the semi space is quite expensive at this point. Look for opportunities, such as today with the NASDAQ coming down, to buy a bit cheaper.

They reported 30% sales growth YOY in May and 33% YOY in June and easily beat estimates. Shares jumped 3.54% today.

Makes NVDA's chips. Building massive plant in Arizona, got $$ from Biden administration. Great growth ahead, driven by AI chips. Building new capacity, which will be completely sold out over the next few years. Less upside and downside than NVDA, as they make chips for a diversified group.

Two completely different companies. NVDA is the creative genius leading the way in AI, whereas TSM makes the chips. 

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.