Taiwan Semiconductor MFG. (TSM)

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.

In midst of building huge new plant in Arizona. Revenues should be up this year about 30%, another 30% in 2025. Phenomenal sector. The place to be with AI taking off.

All the semis ran up last year, so let them drift down. TSM is okay. Was up 32% last year. Let its PE falls to 17.5x PE.

Geopolitical risk a concern, but overall is confident on fate of Taiwan (threat of China invasion). Demand for semi-conductors continues to rise. Very good margins in business. Strong brand name. 

Bit of a trade. He sold in early fall around $107, picked it back up in low $90s. Undisputed market leader in foundries. Core holding, but you have to pick your spots.

Today the company announced that demand has really picked up, revenues up 35% on the quarter. This spurred a rally in all semis.

It has done very well and should be fine for the long term. It has caught up with and surpassed Intel as the industry leader. However there is political risk.