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TSMC’s September Surge: Is Europe Expansion the Catalyst?

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

Increased investment and demand in the semiconductor industry, particularly Taiwan Semiconductor Manufacturing Company Ltd.’s expansion plans, have captured significant market attention. On Thursday, Taiwan Semiconductor Manufacturing Company Ltd.’s stocks have been trading up by 10.56 percent.

Major Developments

  • With a reported 39.6% increase in September revenue to NT$251.87 billion, TSMC showcases robust growth in market performance.
  • Plans for new European plants emphasizing artificial intelligence chips suggest TSMC’s strategic expansion and foothold in a growing and vital sector.
  • TrendForce analysis projects TSMC’s global foundry revenue share to escalate to 64% in 2024, increasing from 51% in 2019, indicating significant market dominance.
  • Collaboration between TSMC and Amkor Technology in Arizona introduces advanced packaging and testing services, hinting at faster product cycles and increased tech leverage.
  • Technology stock market trends diverge with TSMC shares up by 0.8%, following a positive revenue announcement.

Candlestick Chart

Live Update at 13:33:28 EST: On Thursday, October 17, 2024 Taiwan Semiconductor Manufacturing Company Ltd. stock [NYSE: TSM] is trending up by 10.56%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

Financial Overview of TSMC

TSMC’s latest earnings report revealed a substantial leap, with September’s revenue achieving an impressive 39.6% year-on-year growth. This spike brings the company’s earnings for January through September up by 31.9%, showcasing consistent upward momentum. Parsing through the numbers, we see an enterprise value sitting at approximately $972 billion, reflecting investor confidence despite a swiftly dynamic market.

Key ratios like the pre-tax profit margin, standing tall at 42.3%, shine brightly, drawing a picture of financial robustness. But it’s not all glittering figures—P/E ratios suggest a premium valuation, which every investor will weigh against the growth potential. In simpler terms, while the price tag might seem hefty, the promise of future returns gleams just as brightly.

In Europe, a calculated chess move is unfolding with the construction of new fab sites focused on artificial intelligence chips. The whisperings of AI demand show TSMC’s foresight in capitalizing on this burgeoning technology sector. The story behind this expansion speaks volumes about growth strategies honing in on high-yield sectors and regions. After all, TSMC’s projected dominance translates to a commanding foundry revenue market share of 64% by 2024, a leap from 51% in 2019.

More Breaking News

Looking at stock data, the market certainly vibrated with excitement. A significant climb in early October appears correlated with these ambitious plans and outstanding past earnings. On Oct 17, the stock climbed to $207.28, enclosing a narrative of growth amidst broader tech stock declines.

Insights and Impacts

The recent collaboration with Amkor Technology in Arizona is more than just a blip on the radar. It’s a strategic leap which could significantly shorten product cycles and enhance competitive agility. Such alliances, akin to tightened sneaker laces before a race, are geared to ensure TSMC doesn’t just keep pace but sprints ahead in its technological marathon.

The strategic gearing of TSMC towards artificial intelligence in Europe is another brick in their fortress wall. The fabrication capacity of AI chips meets a global uptick in demand—a demand driven by tech advancements and innovations that seem to get loftier each day.

Financially, TSMC’s health reflects through solidified assets and calculated financial leverage, with earnings translating into substantial operational capabilities. Though the company’s current debt and capital liabilities stand measurable, they seem manageable under the vast umbrella of equity and growth revenues.

A scroll through key performance indicators speak to management’s effectiveness, boasting returns on assets at a tantalizing 13.2%. The sheer operational efficiency can’t be understated, especially when peeking through the visibility it affords into the future growth corridors dynamically evolving.

Conclusion

In the grand symphony of TSMC’s financials, the notes of strategic expansion, robust earnings, and strong financial metrics harmonize into a compelling narrative. This recent momentum shift, marked by significant partnerships and global footprint growth, suggests a path paved for more gains.

Beneath the company’s fervent march forward, a swirling dance of numbers paints a story of exciting but cautious growth. As TSMC continues to etch its presence—whether through factories dotting Europe or with a symbiotic tech tango in Arizona—the road ahead looks promising. The venture into AI signifies not just a focus on present gains but a firm bet on the future of technology.

For the discerning eye, the measures reflected in TSMC’s financial mirrors showcase a robust enterprise with an inviting yet risky valuation for keen participants in the dance of investment potential.

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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

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

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”