Taiwan Semiconductor's Proven Strategy: How Past Moves Led to a Stock Price Doubling in Just One Year - $TSM Analysis
The Last Time Taiwan Semiconductor Did This, The Stock Doubled in a Year
Source: The Motley Fool
Investment Potential of Taiwan Semiconductor
Taiwan Semiconductor Manufacturing Company (TSMC) has shown strong performance since 2020. Its current situation resembles that of 2020, raising optimism among investors.
Historical Performance
- TSMC's stock doubled in value after a similar setup in 2020.
- With massive projected sales growth related to AI, a similar trajectory might occur in 2025.
Market Demand and Growth
- TSMC anticipates rapid growth in AI-related chip sales, estimating a compound annual growth rate (CAGR) of 50% over five years.
- AI revenue is expected to triple in 2024, constituting mid-teen percentages of overall revenue.
Technological Advancements
TSMC is the largest third-party chip manufacturer globally, known for its cutting-edge technology.
Current and Future Technologies
- TSMC utilizes the advanced 3nm process node for chip production.
- The company is transitioning to a 2nm process, expected to be operational by late 2025.
Valuation Perspectives
- At the start of 2024, TSMC was undervalued at around 19 times earnings.
- Current valuations are slightly above early 2020 levels, allowing for a meaningful comparison.
Outlook for Investors
While there are no guarantees the stock will double again, the conditions appear favorable for substantial growth.
Market Predictions
- Conditions are in place for TSMC to potentially outperform the market in 2025.
- Investors are encouraged to watch the ongoing demand for AI semiconductors.
