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Why Does TSM’s Stock Continue to Glisten Amid Global Expansion?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

Taiwan Semiconductor Manufacturing Company Ltd.’s stock is surging, driven by strategic advancements and strong demand in the semiconductor sector, resulting in a 10.82 percent rise on Thursday.

The Current Expansion Endeavours and the Financial Highlights

  • The aspiration for further European expansion is a leap towards widening global footprints. The focus on artificial intelligence chips reveals budding commitment and strategic eruption.

Candlestick Chart

Live Update at 08:51:28 EST: On Thursday, October 17, 2024 Taiwan Semiconductor Manufacturing Company Ltd. stock [NYSE: TSM] is trending up by 10.82%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • Significantly increasing revenues, both in monthly and longer duration, illustrate vigorous financial strength. A robust 39.6% revenue escalation for September was notable.

  • Advanced packaging and testing services collaboration in Arizona aims to cater snugly to customer needs—an acceleration move to strengthen technology development.

The Resplendent Financial Journey and Market Insights

Taiwan Semiconductor Manufacturing Company (TSMC) is demonstrating a resilient, formidable performance that’s capturing the stock market’s shimmer. Diving into the recent figures reveals significant insights. The recent earnings call was a wealth of clarity. Notably, TSMC’s September revenue, worth approximately NT$251.87 billion, marked a thunderous 39.6% jump from the previous fiscal display. It also sprinted ahead with a compelling 31.9% rise across January to September accumulated endeavors. Never before has the dance of numbers felt so poetically vibrant.

The labyrinthine world of valuations always whispers stories too. TSM’s Price-to-Earnings (P/E) ratio flutters at around 36.23, a figure reflecting investor anticipation and belief in growth potential. On considering their consistency over the years, one finds the PE high over the last five years at a captivating 1.39, contrasting starkly with a low flitting in calm negative gestures. With total revenue reaching $2.16 trillion (in New Taiwan dollars), vitality pervades the numbers.

Chalking another win is TSMC’s leverage prowess. The company maintains a balanced leverage ratio of 1.6, echoing a healthy approach in utilizing debt for capital creation. The whisperings on their balance sheet highlight over 47,000 billion New Taiwan dollars in cash, painting an enviable picture of liquidity and flexibility to conquer newer summits. The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) favours a smooth operation with robust traction.

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The ticker’s performance aligns well with these fundamentals. Observing the action from its stock movements, a high dance at $207.77 on Oct 17, 2024, captures a recent crest, having rebounded admirably from the trough of $175.8 earlier this month.

Unraveling the Expansion Strategies

It’s not just numerical prowess where TSMC delights us; geographical expansion melds seamlessly with their narrative. Your eyes twinkle glimpsing at horizons far beyond familiar shores. The recent bellow to construct new semiconductor fabrications in Europe hinges on AI chips—a golden opportunity to quench insatiable innovation thirsts. If Europe is a stage, Dresden is their opening act.

Adding another feather to their cranium, TSMC joins forces with Amkor Technology over in Arizona. This partnership, set to bolster advanced packaging and testing services, is promising. Perhaps it’s like a painter adding the final strokes to an artwork—an important collaboration stewing desired tech prowess.

These expansions are not mere footprints on sand, ephemeral and soon forgotten; instead, they’re embedding roots deep and wide to anticipate future needs and challenges. The stock, reflecting investor’s buoyed spirits, mirrors this confidence.

Elaborate yet simple—such is the genius of TSMC’s recent journey. There’s an enthused dance between immediacy and the long run, resonating the harmony of near-term gains with future repositioning. The interweaving of strategic growth initiatives with their financial robustness evokes optimistic analysis from spectators across Wall Street and beyond.

The Ripple Effect of These Financial and Strategic Moves

TSMC’s navigations in these unpredictable waters remind one of an ocean captain adjusting sails wisely through tempest and calm alike. The targeted expansion is akin to selecting the prime portions of a towering buffet, ensuring flavour and substance translate to strategic innovation.

Strategically, the collaboration with Amkor Technology epitomizes an astute stride to take the crown in advanced packaging capabilities. The mutual leverage of resources commits them deeply and shrewdly to the rapid test-service turnaround, thus beefing up competitive advantage globally.

Revenue, unlike the tides, is scaling heights. The pronounced year-on-year growth holds a magnifier to purposeful strategies and efficient operations. When tracing the tapestry that is TSMC’s journey, one sees the focused blend of intention, expansion, and operational excellence vividly embroidered.

The vibrant revenue performance couples seamlessly with strategic maneuvers, embroidering a story of global prowess while adeptly meeting AI developmental demands. There’s excitement in the air, an insistent rhythm in the beating drums across stock exchanges worldwide—a thrilling saga diligently unfolding.

Indeed, as one meanders down the extensive gallery of TSMC’s achievements, the tangible results and strategic aspirations whisper one silent, resounding truth: the present is lucid, and the future appears boundless.

Conclusively, this celestial orchestra underscores the gleaming dance TSMC conducts between vigilant market plays and financial aptitude. Whether an investor or academic observer, such a spectacle invites analysis, admiration, and a keen interest in what’s to follow in TSMC’s illustrious journey.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

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The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”