Nvidia (NASDAQ: NVDA) has played a pioneering role in artificial intelligence (AI) technology for more than three years now, which is not surprising as its chips have helped train popular large language models (LLMs) and move those models into production. However, Nvidia has been losing steam of late. The semiconductor stock is up just 3% in the past six months, driven by multiple concerns such as its valuation, the sustainability of high AI data center spending, and circular financing deals. But there's a ...

Market Performance - The Taiwan stock market index rebounded from a low in April, reaching a historical high of 28,568.02 points on December 11, but is facing short-term technical pressure that may lead to volatility [2] - On April 7, the stock market experienced a significant drop of 2,065 points (9.7%), the largest single-day decline in history, due to U.S. tariff policies; however, a policy reversal on April 10 led to a rebound of 1,608 points, setting a new record [2] - The MSCI quarterly adjustment resulted in a massive trading volume of 7,491.6 billion NTD at the market close, marking the second-largest volume in history, with foreign investors selling a net of 299.5 billion NTD on that day [2] Company Developments - The Yuanta Taiwan 50 ETF (0050) completed a 1-for-4 split in June 2025, with its fund size surpassing 1 trillion NTD by December 8 [3] - Nomura Asset Management launched its first actively managed ETF (00980A) on May 5 and the first Taiwan-Japan linked ETF (009812) on September 18, indicating diversification in the market [3] - The introduction of the Taiwan Individual Savings Account (TISA) in 2025 provides a new tool for retirement planning [3] Leadership Changes - The Investment Trust and Consulting Association elected a new chairman, You Zhaowen, while the Securities Association re-elected Chen Junhong as chairman, and the Futures Association elected Zhan Zheng'en as chairman, which may influence industry policy communication [4] Institutional Insights - According to Bloomberg's report in November 2025, TSMC's stock price surged by 36% that year, increasing its weight in the Taiwan stock market to nearly 43%, which poses a low allocation risk for many actively managed funds due to regulatory limits on single stock holdings (10%) [5] - Fund managers are attempting to invest in alternative assets or derivatives to hedge against this risk, but replicating TSMC's uniqueness remains challenging [5]

Financial Performance - TSMC reported Q4 2025 revenue of $33.73 billion, a year-on-year increase of 25.5%, with net profit around $16 billion, up 35%, and a gross margin of 62.3% [2] - For Q1 2026, TSMC provides an optimistic revenue guidance of $34.6 billion to $35.8 billion, with a gross margin expected between 63% and 65% [2] Capital Expenditure - TSMC's capital expenditure budget for 2026 is projected to be between $52 billion and $56 billion, a significant increase of approximately 37% from $40.9 billion in 2025, marking a historical record for the company [3] Product Development - TSMC's 2nm process has commenced mass production as scheduled in Q4 2025, with good yield performance. Revenue from 2nm is expected to surpass that of 3nm and 5nm combined by Q3 2026, becoming a core growth driver [4] Pricing Strategy - TSMC plans to increase advanced process pricing for four consecutive years from 2026 to 2029, with a single-digit percentage increase expected in 2026 to reflect rising costs and tight capacity [5] Project Progress - In Arizona, the first factory began mass production in Q4 2024, the second factory is completed and set for mass production in H2 2027, and the third factory is under construction [6] - In Kumamoto, Japan, the first factory is set to begin mass production by the end of 2024, with the second factory already under construction [6] - In Dresden, Europe, a joint venture factory is progressing as planned, with mass production timing dependent on customer demand [6] - In Taiwan, multiple 2nm wafer fabs in Hsinchu and Kaohsiung are in preparation to strengthen advanced process advantages [6] Market Outlook - AI demand remains strong, with AI-related revenue accounting for over 10% of total revenue, and customer confirmation of demand authenticity [7] - Several brokerages, including JPMorgan and Goldman Sachs, raised TSMC's target price in January 2026, citing revenue growth potential and margin improvement [7] - TSMC's stock price reached a record high of $341.64 in January 2026, with a total market capitalization exceeding $1.7 trillion [7]

Group 1 - Gold prices experienced a sudden drop, with spot gold falling over 3% and nearly $200 during the day, while spot silver prices dropped over 8% [1] - Major U.S. stock indices saw a collective decline, with the Nasdaq down over 1.5%, the Dow Jones down nearly 1%, and the S&P 500 down 1% [1] Group 2 - Apple shares fell over 3%, resulting in a market value loss exceeding $120 billion (approximately 82 billion RMB), with other tech stocks like Microsoft, Amazon, Tesla, Meta, and Nvidia also experiencing declines [2] - The Nasdaq Golden Dragon China Index, which tracks Chinese stocks listed in the U.S., dropped nearly 3%, indicating a broader decline in Chinese stocks [4]

Core Viewpoint - The company emphasizes providing actionable and clear investment ideas through independent research, aiming to help members outperform the S&P 500 and mitigate significant losses during market volatility [1] Group 1 - The service offers at least one in-depth article per week focused on investment ideas [1] - Members have reportedly achieved better performance than the S&P 500 while avoiding substantial drawdowns in both equity and bond markets [1]

TSMC (NYSE: TSM), the world's largest and most advanced contract chipmaker, might not initially seem like a high-growth artificial intelligence (AI) stock. Yet over the past five years, its shares have rallied by more than 170% as AI chipmakers lined up to use its plants. Let's see why it could still be one of the best AI stocks hiding in plain sight for 2026 and beyond. Why is TSMC a top AI stock? TSMC, based in Taiwan and operating plants in other countries, manufactures the world's smallest, densest, ...

Market Overview - The U.S. stock market opened higher but then retreated, with the Nasdaq down 0.71%, the Dow Jones up 0.13%, and the S&P 500 also turning negative, with over 3,200 stocks declining [1] - Last week, initial jobless claims in the U.S. were reported at 227,000, higher than the forecast of 224,000 and the previous value of 231,000 [3] Technology Sector Performance - The performance of the "Magnificent Seven" tech stocks was mixed, with Nvidia and Google slightly up by 0.1%, while Tesla, Microsoft, Meta, Amazon, and Apple saw declines, with Apple nearing a 2% drop and its market cap falling below $4 trillion [3] - Semiconductor stocks experienced volatility, with SanDisk rising over 5% and Micron Technology up over 2% [3] Chinese Stocks - Chinese stocks listed in the U.S. faced widespread declines, with the Nasdaq Golden Dragon China Index dropping nearly 2%. Notable declines included Huya down over 7%, Tencent Music down over 6%, and Beike down over 4% [5] Trading Volume and Market Dynamics - The average daily trading volume in the U.S. stock market reached a record $1.03 trillion in January, a 50% increase compared to the same period in 2025, with over 19 billion shares traded daily, marking the second-highest in history [8] - The rise in trading volume is attributed to increased retail participation, the popularity of "zero-day-to-expiration" options, and a significant shift in investor focus from tech giants to underperforming sectors like energy and industrials [8] Hedge Fund Activity - Hedge funds have significantly increased their short positions in U.S. stocks, with the nominal short selling of individual stocks reaching the highest level since 2016. Short positions are now double the long positions [9] - Concerns over the disruptive impact of artificial intelligence on business models have led to a tumultuous week on Wall Street, with a total market value loss of $611 billion across 164 stocks in software, financial services, and asset management [9] Sector Rotation - The semiconductor and IT services sectors were among the few to see net buying last week, with semiconductor stocks rising, highlighting a divergence between chip stocks and software stocks [10] - Hedge funds are rotating into defensive sectors, with healthcare becoming the most favored sector for fund inflows, surpassing industrials [10]

Core Insights - SGA's Emerging Markets Growth Strategy experienced a divergence from the market in Q4 2025, with the portfolio returning 0.8% (Gross) and 0.6% (Net), underperforming against the MSCI EM Net TR Index return of 4.7% and the MSCI EM Growth Net TR Index return of 3.3% [1] - For the full year 2025, the portfolio achieved returns of 23.8% (Gross) and 22.8% (Net), lagging behind the indexes which returned 33.6% and 34.3% respectively [1] - The portfolio anticipates annual revenue growth of 13% and earnings growth of 16% over the next three years [1] Company Highlights - Taiwan Semiconductor Manufacturing Company Limited (TSMC) was identified as a significant contributor in Q4 2025, driven by strong demand for advanced semiconductor manufacturing and improved gross margins [2][3] - TSMC's stock closed at $374.09 per share on February 11, 2026, with a one-month return of 10.78% and a twelve-month increase of 87.52% [2] - TSMC's market capitalization stands at $1.96 trillion [2] - The company raised its revenue growth guidance to the mid-30% range, with AI-related growth targets expected to exceed the current mid-40% level [3] - TSMC is enhancing its capital expenditure (CapEx) to support future growth and is diversifying manufacturing locations with new facilities in Japan, Germany, and the U.S. [3] - The company is well-positioned for strong double-digit revenue and earnings growth due to its technology leadership, strong customer relationships, and disciplined execution [3]

Market and Performance Overview - Emerging markets advanced 4.7% in Q4 2025, finishing as one of the best-performing global equity asset classes, with the MSCI Emerging Markets Index rising 33.6% for the year, outperforming the MSCI EAFE Index (+31.2%) and the U.S. S&P 500 Index (+17.9%) [2] - Performance in Q4 was led by Korea and Taiwan, with Korean equities soaring 27.3% driven by a 50% gain in the IT sector, while Taiwanese stocks climbed 10.4% due to AI-related momentum [3] Sector Performance - The IT sector gained 16.4%, bolstered by AI-related stocks, while the materials sector advanced 11.6% as gold prices rose over 10% and copper prices hit record highs [6] - Energy, financials, and industrials sectors outperformed the index, while consumer discretionary, communication services, health care, and real estate underperformed [6] Company Highlights - SK Hynix saw its shares soar over 80% in Q4 and nearly tripled for the year due to increased demand for DRAM and NAND memory, particularly for AI workloads [7] - Samsung Electronics also experienced strong performance, benefiting from memory shortages that enhanced pricing power [7] - Taiwan Semiconductor, a leading manufacturer of high-end chips for Nvidia, significantly outperformed the benchmark [7] Regional Contributions - Significant contributors included China's Sieyuan Electric and Korea's HD Hyundai Electric, supporting AI data center buildouts [10] - Capitec Bank in South Africa delivered strong financial results, while Titan, an Indian jewelry retailer, showed encouraging performance despite India's overall underperformance [10] Detractors - Alibaba and Tencent surrendered gains due to a broader rotation out of China, while Contemporary Amperex Technology also faced declines [11] - MercadoLibre remained weak amid competition concerns in Brazil, and Apollo Hospitals detracted due to its large portfolio weight in a lagging Indian market [12] Portfolio Positioning - The strategy added four new positions, including Raia Drogasil and Nu Holdings in Brazil, while exiting positions in B3 S.A. and Proya Cosmetics [13][14][17] - Upgraded exposure in Indonesia by replacing PT Bank Rakyat Indonesia with PT Bank Central Asia, which has a strong deposit franchise [15] Outlook - The emerging market recovery is viewed as being in its early stages, with appealing valuations and supportive macroeconomic drivers [18] - Anticipated increased foreign investments into EM equities, driven by lower valuations and stronger economic growth [19] - The Chinese economy shows signs of increased stability, with improved trade relations and a more optimistic outlook [20] - Emerging markets offer opportunities in world-class companies with technological innovation, particularly in sectors like industrial automation, e-commerce, and fintech [21] - India remains a focus due to its large population and status as the fastest-growing major global economy, despite challenges faced in 2025 [22] Portfolio Highlights - The ClearBridge Emerging Market Strategy outperformed its benchmark in Q4, with gains across five of the nine sectors invested [23] - Stock selection in IT and industrials sectors contributed positively, while communication services and an underweight in materials detracted from performance [24] - Leading contributors included SK Hynix, Samsung Electronics, and Capitec Bank, while Tencent, Alibaba, and MercadoLibre were primary detractors [25]

Investment Rating - The industry is rated as "Leading" indicating expected performance above the benchmark index over the next 12 months [3]. Core Insights - Recent performance shows that US and Hong Kong tech stocks underperformed the market, while A-share tech stocks outperformed. The MSCI Information Technology Index slightly declined by 0.2%, lagging behind the MSCI Global Index which rose by 1.8% [3]. - AI capital expenditures from cloud service providers are expected to grow significantly, with a forecasted increase of 65% year-on-year to reach $619.4 billion in 2026, surpassing previous expectations of 33% growth [3][39]. - TSMC reported a 37% year-on-year revenue growth in January 2026, indicating a strong demand for AI infrastructure and a robust capital expenditure guidance of $52-56 billion for 2026 [3][25]. - The semiconductor manufacturing equipment imports in December 2025 decreased by 3% year-on-year, but the decline is narrowing, suggesting a stable demand for domestic semiconductor equipment [3][34]. Summary by Sections Market Performance - In the period from January 10 to February 9, 2026, the software sector saw a significant decline of 15.8%, while hardware and semiconductor stocks performed better [3]. - The A-share Wind Information Technology Index increased by 0.6%, contrasting with the 0.8% decline in the CSI 300 Index [3]. Semiconductor Market - The average spot price for DDR5 (16Gb) has slightly decreased to $33.61, while the contract price for DDR4 (8Gb) rose to $13.00 in January 2026 [3]. - NAND prices have stabilized after a significant increase over the previous months, with the average price for 1Tb QLC remaining flat in February 2026 [3][31]. Investment Recommendations - The report suggests investors focus on AI infrastructure and domestic substitution opportunities, while also being cautious of high valuations that may increase market volatility [3]. - Recommended stocks include Nvidia (NVDA US), Broadcom (AVGO US), and TSMC (TSM US), all rated as "Buy" with reasonable valuations [3][40].