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Globe and Mail
a day ago
- Business
- Globe and Mail
Taiwan Semiconductor Rises 13% in Three Months: How to Play the Stock?
Taiwan Semiconductor Manufacturing Company TSM has delivered a solid 12.6% gain over the past three months. This performance easily beats the broader Zacks Computer and Technology sector, which rose 4.4% in the same period. Taiwan Semiconductor stock has also moved ahead of several chip peers, including ASML Holding ASML, Lam Research Corporation LRCX and Marvell Technology, Inc. MRVL. While shares of Marvell Technology have plunged 28.4% over the past three months, ASML Holding and Lam Research have risen 6.6% and 8.8%, respectively. This outperformance shows investors are increasingly confident in Taiwan Semiconductor's long-term story, even during a volatile market shaped by trade conflicts and geopolitical risks. We believe this momentum is grounded in strong fundamentals, and TSM's long-term outlook justifies a hold position for now. TSM 3-Month Price Return Performance AI Boom Fuels Multi-Year Tailwinds for TSM Taiwan Semiconductor continues to lead the global chip foundry market, and it's benefiting heavily from the artificial intelligence (AI) revolution. Its manufacturing dominance and scale have made it the go-to partner for advanced chipmaking. Whether it's NVIDIA, Marvell Technology or Broadcom, many top chip designers rely on TSM for producing custom AI accelerators and graphics processing units (GPUs). In 2024, AI-related revenues tripled, making up a mid-teen percentage of Taiwan Semiconductor's total revenues, and the momentum is far from over. The company expects AI-related sales to double again in 2025, with an impressive 40% compound annual growth rate over the next five years. This positions TSM as the undisputed backbone of AI-driven technological advancements. The company kicked off 2025 with excellent first-quarter results. Revenues surged 35% year over year to $25.53 billion, and net income rose 53% to nearly $11 billion in the first quarter. This growth was powered by the booming demand for its advanced 3nm and 5nm nodes, which now account for 58% of total wafer sales. Taiwan Semiconductor's first-quarter EPS also jumped 53.6% to $2.12 and surpassed the Zacks Consensus Estimate of $2.03. The stock beat the consensus mark for earnings in each of the trailing four quarters, the average surprise being 6.9%. Taiwan Semiconductor plans to ramp up capital spending to between $38 and $42 billion in 2025 to further capitalize on the AI-driven growing demand for advanced chips. This is a sharp increase from the $29.8 billion spent in 2024, with around 70% earmarked for advanced manufacturing capabilities. Undervaluation Supports a Hold Strategy for TSM Despite its strong growth, Taiwan Semiconductor stock still looks reasonably priced. It trades at a forward 12-month price-to-earnings (P/E) multiple of 19.96X, which is lower than the sector average of 25.52. This discount adds to the appeal for long-term investors. Taiwan Semiconductor also trades at a lower P/E ratio than other semiconductor players, including ASML Holding, Lam Research and Marvell Technology. At present, ASML Holding, Lam Research and Marvell Technology trade at P/E multiples of 26.09X, 20.8X and 20.04X, respectively. Given its superior scale and exposure to AI growth, TSM's relative valuation strengthens the case for continuing to hold the stock. Short-Term Headwinds Are Still in Play for TSM Stock Despite its strengths, Taiwan Semiconductor faces near-term headwinds. Higher energy prices in Taiwan, following a 25% electricity hike in 2024, pose a considerable challenge, especially as advanced nodes demand greater power. Softness in key markets like PCs and smartphones also dampens near-term prospects. These traditionally strong revenue drivers are projected to see only low single-digit growth in 2025, limiting Taiwan Semiconductor's growth despite rising AI demand. The company's global expansion strategy adds further strain. New fabs in the United States (Arizona), Japan and Germany are vital for geopolitical risk mitigation, but they come with higher costs. These facilities are expected to drag down gross margins by 2-3 percentage points annually over the next three to five years due to higher labor and energy costs, along with lower utilization rates in the early stages. Escalating geopolitical tensions, particularly U.S.-China relations, pose strategic risks. With significant revenue exposure to China, Taiwan Semiconductor is vulnerable to export restrictions, supply-chain disruptions or further regulatory pressure. These uncertainties could weigh on near-term performance. Conclusion: Hold TSM Stock for Now Taiwan Semiconductor remains a cornerstone of the semiconductor industry. Its unmatched capabilities in advanced chip manufacturing, strong exposure to AI demand and expanding capacity give it a solid long-term trajectory. However, short-term headwinds, from rising costs and global expansion pressures to geopolitical friction, call for a more cautious stance. Given its valuation and growth backdrop, holding the stock makes the most sense right now. Taiwan Semiconductor currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months. Free: See Our Top Stock And 4 Runners Up Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ASML Holding N.V. (ASML): Free Stock Analysis Report Lam Research Corporation (LRCX): Free Stock Analysis Report Marvell Technology, Inc. (MRVL): Free Stock Analysis Report Taiwan Semiconductor Manufacturing Company Ltd. (TSM): Free Stock Analysis Report This article originally published on Zacks Investment Research (
Globe and Mail
6 days ago
- Business
- Globe and Mail
Nvidia warns of China risks as CEO Jensen Huang praises Trump
Even as Nvidia NVDA-T reported another blockbuster quarter of 69 per cent sales growth on Wednesday, the maker of artificial intelligence chips warned of more emerging risks to its business due to the technology conflict between the U.S. and China. Tucked into Nvidia's quarterly filing with U.S. securities regulators, Nvidia for the first time said restrictions on the use of open-source AI models from China such as DeepSeek and Qwen could hurt its business, as could U.S. rules barring connected-vehicle technology from China, where Nvidia's long-struggling car chip business has finally flourished. While Nvidia CEO Jensen Huang on a conference call with analysts praised U.S. President Donald Trump's decision to rescind an export rule put in place by former President Joe Biden that would have regulated the flow of Nvidia's chips around the world, the company's quarterly filing noted that no new rule had been issued in its place and that a 'replacement rule may impose new restrictions on our products or operations.' Nvidia reports robust quarterly growth despite Trump-driven tariff turbulence On the other hand, Huang criticized new export curbs imposed by the Trump administration in April. The curbs stop the company from selling its H20 chip made for the Chinese market, which Huang called 'a springboard to global success.' The export limits cost Nvidia US$2.5 billion in sales during its just-ended fiscal first quarter, and it expects another US$8 billion sales hit during the current fiscal second quarter. The company reported US$4.6 billion in revenue from H20 sales in China as customers stockpiled the chips before the curbs set in, with the China business accounting for 12.5 per cent of overall revenue. 'The question is not whether China will have AI – it already does. The question is whether one of the world's largest AI markets will run on American platforms,' Huang said, later adding that 'AI export controls should strengthen U.S. platforms, not drive half of the world's AI talent to rivals.' Huang also argued that keeping Chinese open-source models such as DeepSeek and Qwen running on Nvidia chips provides U.S. firms with valuable insight on where the global AI industry is headed. 'U.S. platforms must remain the preferred platform for open-source AI,' he said. 'That means supporting collaboration with top developers globally, including in China. America wins when models like DeepSeek and Qwen run best on American infrastructure.' Republican and Democratic senators Jim Banks and Elizabeth Warren sent a letter to Huang on Wednesday raising national security concerns about Nvidia's plans to open a research and development facility in Shanghai. They also asked the company to provide a timeline and description of its plans for the proposed facility. Nvidia is 'simply leasing a new space for existing employees, who need the room in the post-COVID return to work. The scope of work will remain unchanged,' a company spokesperson said. Nvidia shares rose 4 per cent on Thursday as news that a U.S. trade court blocked most of Trump's proposed tariffs also boosted investor sentiment. The company will add around US$130 billion to its market value of about US$3.289 trillion, if the gains hold. Despite the China export curbs, Nvidia forecast sales of US$45 billion, plus or minus 2 per cent, in the second quarter, only slightly below analysts' average estimate of US$45.90 billion, according to data compiled by LSEG. That would imply growth of about 50 per cent from a year earlier. Company executives also highlighted deals worth potentially billions of dollars in the coming months and years in Saudi Arabia, the United Arab Emirates and Taiwan, leading analysts to conclude the impact of U.S.-China trade tensions was not as bad as feared. 'Rather than downplay the China hit, (Huang) contextualized it as a known, manageable speed bump in an otherwise hyper-accelerated growth narrative,' said Michael Ashley Schulman, chief investment officer of Running Point Capital. In his praise for Trump, Huang highlighted the president's deal-filled tour of the Middle East. 'Trump wants U.S. tech to lead,' Huang said. 'The deals he announced are wins for America, creating jobs, advancing infrastructure, generating tax revenue and reducing the U.S. trade deficit.' Huang also said that he agreed with a vision expressed by cabinet officials such as Commerce Secretary Howard Lutnick of bringing factories back to the United States and staffing them with robots. 'Future plants will be highly computerized in robotics. We share this vision,' Huang said.
Globe and Mail
6 days ago
- Business
- Globe and Mail
Intel Stock Is a Speculative buy Because of This 1 Factor
The decline of Intel (NASDAQ: INTC) and the numerous failed efforts to recover its leadership in the chip market have undoubtedly frustrated many investors. The company has hired and dismissed several CEOs who have tried and failed to return Intel to competitiveness. So profound are its missteps that the stock trades at levels it first reached in 1997. The current CEO, Lip-Bu Tan, is the latest leader to try to get Intel back on track. Although Cadence Design Systems prospered under his leadership, succeeding at Intel is far from guaranteed. Nonetheless, risk-averse investors have at least one compelling reason to buy a speculative position in Intel, which investors should consider when deciding whether to buy the stock. The reason to buy Intel In short, investors should buy Intel because of its valuation. In this case, the "valuation" does not come from the metrics one might initially assume, like the price-to-earnings (P/E) ratio. Falling profits and the recent turn back to losses led to a spike in the earnings multiple, taking it to 104. Due to an expected return to profitability, its forward P/E ratio is 66, but that does not make the stock inexpensive. The same goes for Intel's price-to-sales (P/S) ratio of 1.6. With analysts expecting revenue to fall by 5% during 2025, it will probably take more than a low sales multiple to convince investors to buy. Instead, investors need to look at the book value and, by extension, the price-to-book (P/B) ratio. In the first quarter of 2025, Intel reported a stockholders' equity of $106 billion, which is what Intel would net if it decided to liquidate its assets and cover its liabilities. However, when multiplying Intel's outstanding shares by the stock price, it adds up to a market cap of $88 billion. That translates into a P/B ratio of 0.88. Such a price means that if the company liquidated, shareholders could presumably create $18 billion by that action. Making sense of Intel's book value Indeed, Intel has no plans to liquidate, meaning it will have to eventually unlock some of its intrinsic value to drive investor returns. This is difficult because the loss of its technical lead makes it more of a commodity chip business. Such stocks tend to have difficulty attracting a premium and outperforming the S&P 500, leaving cutting-edge stocks like Nvidia to attract premium pricing. Nonetheless, Intel still holds competitive advantages often overlooked by today's investors. For one, no company owns more foundries on U.S. soil than Intel. The government has pushed for domestic manufacturing, and Intel is investing in the most advanced equipment sold by ASML, which is necessary to make the world's most advanced chips. Additionally, it remains a force in the industry despite losing its title as the world's largest semiconductor company many years ago. In the first quarter of 2025, Intel generated $12.7 billion in revenue. Although that fell slightly from year-ago levels, that is well above the $7.4 billion in revenue generated by Advanced Micro Devices, making it a major industry player. Thus, if it finds a way to close its technical gap and draws more customers to its foundries, Intel could stage a comeback. Investing in Intel stock Despite its numerous challenges, Intel stock is still a speculative buy for risk-averse investors. Admittedly, Lip-Bu Tan's attempt to transform Intel will take years to achieve, and that success is not guaranteed. However, even if Intel stock does not deserve a premium, the fact that it sells for well under its book value indicates the stock is oversold. Moreover, Intel remains influential in the semiconductor industry, and its foundry footprint could become valuable in the shifting political environment. Ultimately, Intel is unlikely to return to industry leadership. Still, as well-positioned as it is in the semiconductor industry, the ability to buy shares below book value significantly increases the odds that investors can profit from this stock. Should you invest $1,000 in Intel right now? Before you buy stock in Intel, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Intel wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,389!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $830,492!* Now, it's worth noting Stock Advisor 's total average return is982% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Will Healy has positions in Advanced Micro Devices and Intel. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Cadence Design Systems, Intel, and Nvidia. The Motley Fool recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
Yahoo
6 days ago
- Business
- Yahoo
Nvidia shares surge as earnings beat despite chip export restrictions to China
Nvidia reported first-quarter earnings for fiscal year 2026 that exceeded market expectations and provided an upbeat outlook for the current quarter. This comes despite an estimated $8 billion (€7.1 billion) loss due to US chip export restrictions affecting sales to China. Nvidia's share price jumped nearly 5% in after-hours trading, placing it just 8% below its all-time high in January. Year-to-date, the stock is set to return to a positive return amid the price surge. Nvidia is now the world's biggest company, surpassing Microsoft and Apple in market capitalisation. 'Investors entered this quarter looking for signs that Nvidia could alleviate short-term concerns. What they received was a clear message that demand remains robust,' said Josh Gilbert, a market analyst at eToro Australia. Sales revenue from Nvidia's core business, data centres, increased by 73% year-on-year to $39.1 billion (€34.7 billion), reaching a new record. However, this represented a deceleration from 93% growth in the previous quarter. Despite the slower pace, the result aligned with market expectations, as some analysts had anticipated weaker figures due to regulatory headwinds. Overall revenue rose 69% to $44.1 billion (€39.2 billion), while earnings per share came in at $0.96 (€0.85), both ahead of expectations. CEO Jensen Huang attributed the sustained growth to strong global demand for artificial intelligence (AI), particularly from major cloud service providers. Nvidia's most advanced AI chip, Blackwell, 'is now in full-scale production across system makers and cloud service providers,' said Huang. 'Global demand for Nvidia's AI infrastructure is incredibly strong. AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate. Countries around the world are recognising AI as essential infrastructure—just like electricity and the internet—and Nvidia stands at the centre of this profound transformation,' he added. The company expects revenue of $45 billion (€40 billion), plus or minus 2%, for the current quarter. 'This outlook reflects a loss in H20 revenue of approximately $8.0 billion due to the recent export control limitations,' it stated. The US government required Nvidia to obtain export licences for its H20 GPUs destined for China during the first quarter. Although the H20 chips had previously been approved, the new rules led to $4.5 billion (€4 billion) in write-downs due to excess inventory. Without this, the company would have generated an additional $2.5 billion (€2.2 billion) in sales. As a result, Nvidia's gross margin for the first quarter stood at 61%. It would have been 71.3% had the charges not occurred. 'The $50 billion China market is effectively closed to the US industry,' Huang said. 'As a result, we are taking a multibillion-dollar write-off on inventory that cannot be sold or repurposed.' Nvidia expects a non-GAAP gross margin of 72.0%, plus or minus 50 basis points, for the current quarter. For context, the margin was 73.5% in the fourth quarter of 2024 and 79% during the same quarter of the previous fiscal year. In an interview with Bloomberg TV, Huang noted that Nvidia is exploring alternatives to the H20 chip. However, the company must obtain approval from the US government for any such measures. Nvidia is among the tech giants supporting President Donald Trump's ambitious AI initiatives in the United States, announced in January. The company also unveiled a partnership with Saudi Arabia's HUMAIN to build AI factories in the kingdom during a recent visit to the region that coincided with Trump's trip. These developments were highlighted in the earnings report in the section for data centre. 'While sales in China are clouded by export restrictions, the Middle East looks set to become the new launchpad for Nvidia's next phase of growth,' Gilbert added. Se produjo un error al recuperar la información Inicia sesión para acceder a tu portafolio Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información
Free Malaysia Today
6 days ago
- Business
- Free Malaysia Today
Nvidia warns of more risks from US-China tech row but CEO praises Trump
Nvidia forecasts sales of US$45 billion in the second quarter, implying growth of about 50% from a year earlier. (Getty Images/AFP pic) SAN FRANCISCO : Even as Nvidia reported another blockbuster quarter of 69% sales growth today, the maker of artificial intelligence chips warned of more risks to its business emerging in the technology conflict between the US and China. Tucked into Nvidia's quarterly filing with US securities regulators, Nvidia for the first time said that restrictions on the use of open-source AI models from China such as DeepSeek and Qwen could hurt its business, as could US rules barring connected vehicle technology from China, where Nvidia's long-struggling car chip business has finally flourished. While Nvidia CEO Jensen Huang on a conference call with analysts praised US President Donald Trump's decision to rescind an export rule put in place by president Joe Biden that would have regulated the flow of Nvidia's chips around the world, the company's quarterly filing noted that no new rule had been issued in its place and that a 'replacement rule may impose new restrictions on our products or operations'. On the other hand, Huang criticised new export curbs imposed by the Trump administration in April. The curbs stop the company from selling its H20 chip made for the Chinese market, which Huang called 'a springboard to global success'. The export limits cost Nvidia US$2.5 billion in sales during its just-ended fiscal first quarter, and it expects another US$8 billion sales hit during the current fiscal second quarter. Sales of the H20 in China earned Nvidia US$4.6 billion in revenue as customers stockpiled the chips before the curbs set in. The China business accounted for 12.5% of overall revenue. 'The question is not whether China will have AI – it already does. The question is whether one of the world's largest AI markets will run on American platforms,' Huang said, later adding that 'AI export controls should strengthen US platforms, not drive half of the world's AI talent to rivals'. Huang also argued that keeping Chinese open-source models such as DeepSeek and Qwen running on Nvidia chips provides US firms with valuable insight on where the global AI industry is headed. 'US platforms must remain the preferred platform for open-source AI,' he said. 'That means supporting collaboration with top developers globally, including in China. America wins when models like DeepSeek and Qwen run best on American infrastructure.' Sales growth powers on Despite the curbs, Nvidia forecasts sales of US$45 billion, plus or minus 2%, in the second quarter, only slightly below analysts' average estimate of US$45.90 billion, according to data compiled by LSEG. That would imply growth of about 50% from a year earlier. Executives also highlighted deals worth potentially billions of dollars in the coming months and years in Saudi Arabia, the UAE and Taiwan, sending Nvidia shares up after hours and leading analysts to conclude the impact of US-China trade tensions was not as bad as feared. 'Rather than downplay the China hit, (Huang) contextualised it as a known, manageable speed bump in an otherwise hyper-accelerated growth narrative,' said Michael Ashley Schulman, chief investment officer of Running Point Capital. In his praise for Trump, Huang highlighted the president's deal-filled tour of the Middle East. 'President Trump wants US tech to lead,' Huang said. 'The deals he announced are wins for America, creating jobs, advancing infrastructure, generating tax revenue and reducing the US trade deficit.' Huang also said that he agreed with a vision expressed by cabinet officials such as commerce secretary Howard Lutnick of bringing factories back to the US and staffing them with robots. 'Future plants will be highly computerised in robotics. We share this vision,' Huang said.
