TSMC-Taiwan Semiconductor: Why I Am Buying The Top

Core Viewpoint - Taiwan Semiconductor Manufacturing Company (TSMC) is experiencing significant sales growth, with a projected 40% year-over-year increase in Q2 2024, indicating strong momentum ahead of its earnings report [1][6][12] Sales Performance - TSMC's net sales for June reached NT $207.87 million, contributing to total Q2 2024 sales of NT$ 673.51 million, reflecting a year-over-year growth rate of 32.9% for June and 40.1% for the quarter [5][7] - The company has seen four consecutive months of sales growth exceeding 30% [5] - In Q1 2024, TSMC's net sales were NT $592.64 million, with a quarter-over-quarter decrease of 5.3% attributed to seasonal smartphone demand [5][6] Revenue Breakdown - High-performance computing (HPC) is the largest contributor to TSMC's sales, accounting for 46% of net sales in Q1 2024, up from 43% in Q4 2023 [2][3] - The 5 nanometer process technologies are crucial for TSMC, representing 56% of net sales in Q1 2024, primarily used for AI chips [4] Market Expectations - Analysts expect TSMC's earnings per share (EPS) to be$ 1.41 for Q2 2024, reflecting a year-over-year growth of 24% [8][9] - The market may adjust profit estimates upward due to TSMC's robust sales growth and the ongoing AI boom, potentially driving the stock to new highs [8][12] Competitive Positioning - TSMC's valuation is currently at a profit multiple of 23.8x, based on anticipated profit growth of 26% year-over-year [9] - Comparatively, Nvidia Corp. is valued at 36.5x with a projected profit growth of 36%, while Micron Technology is expected to see a staggering 780% profit growth next year [10]