Buy This Picks-and-Shovels AI Play Now!

By Rich Duprey, Investor Place, Trades Of The Day, 2024-06-28

If there really is a “new industrial revolution” underway, then investors will want to buy Taiwan Semiconductor Manufacturing (NYSE:TSM) now. This is the top picks-and-shovels play for AI chip stocks and it offers a compelling growth opportunity.

As the leading pure-play foundry for the semiconductor industry, Taiwan Semiconductor supplies all the major AI chipmakers including Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) with their powerful chips.

Because AI is still in its infancy and demand from data centers and enterprise-class customers moving their data to the cloud remains white hot, Taiwan Semiconductor stock is a surefire winner now and for the foreseeable future.

During a Gold Rush, Sell Shovels

Nvidia CEO Jensen Huang told the Databricks conference earlier this month “we are at the beginning of a new industrial revolution” but one that is different from similar upheavals in the past. This time, “we're generating (artificial) intelligence.”

And the chipmaker is leading the way. Sales more than tripled in the first quarter, rising 262% to $26 billion, a record for the semiconductor stock. Yet Nvidia couldn't achieve such growth without first buying its “tools” from Taiwan Semiconductor Manufacturing.

During the Gold Rush of the late 1840s, the real winners were not those who panned for gold but rather the people who sold the miners the picks, shovels and wheelbarrows they needed.

They made money off every miner betting it all on finding a golden nugget. Levi Strauss made millions and created a clothing empire selling miners his unique riveted jeans and other tools.

Taiwan Semiconductor Manufacturing is today's Strauss selling AI miners their shovels. It produces the advanced semiconductors the industry needs to build their AI chips.

Bringing Home the Gold

TSM‘s first-quarter revenue jumped 13% year-over-year to $18.8 billion generating operating earnings of $8.5 billion, a 31% increase from last year.

Margins also improved across the board with gross margins of 53.1%, operating margins of 42% and net margins coming in at 38%. Earnings of $1.38 per share were 9% higher than the year-ago period.

The chip foundry expects revenue to grow as much as 30% to $20.4 billion in the second quarter as demand for its manufacturing remains unrelenting.

And it is not just the traditional chipmakers that Taiwan Semiconductor supplies. For example, it is also a key supplier of Apple‘s M-series chips.

While the tech giant doesn't sell its chips to others but rather uses them for its own use, it plans on making a new chip for its data centers. TSM will again be the supplier.

Mobile chipset maker Broadcom (NASDAQ:AVGO) also counts Taiwan Semiconductor as a key supplier. According to JPMorgan Chase analysts, Broadcom is now the second largest chip supplier behind Nvidia as it has branched out beyond just mobile devices into data centers and more.

Expect Surging Profits

As the equilibrium between supply and demand tilts sharply in favor of the latter, Taiwan Semiconductor Manufacturing is raising its prices. A report from Commercial Times suggests TSM will raise prices on its 3 nanometer wafer by more than 5% while advanced packaging prices are expected to rise by 10% to 20% next year.

As the foundry builds out more facilities to help meet the growth expected, those price increases will flow straight to its bottom line.

The stock trades at elevated valuations on its march toward trillion-dollar status. However, the picks-and-shovels trade makes Taiwan Semiconductor Manufacturing stock worth the premium.

— Rich Duprey

Source: Investor Place

The post Buy This Picks-and-Shovels AI Play Now! appeared first on Trades Of The Day.

Get Access To Marc Chaikin's "Power Gauge Report"

Enter your email address to access all the details.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

The AI Stocks Every Investor Should Have On Their Radar

Enter your email address to access all the details.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Write This Stock Ticker Down Right Now

Enter your email below to see the stock name and ticker on the next page.



By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Write This Stock Ticker Down Right Now

Enter your email below to see the stock name and ticker on the next page.



By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Write This Stock Ticker Down Right Now

Enter your email below to see the stock name and ticker on the next page.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Write This Stock Ticker Down Right Now

Enter your email address to see the name and ticker on the next page.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

How to Collect "Amazon Royalty" Payouts Before the Deadline

Thanks to a little-known IRS loophole, regular Americans can collect up to $28,544 (or more) in payouts from what is called “Amazon’s secret royalty program”…
Enter your email address to access all the details.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Elon Musk's "Project Omega"

It could soon mint new millionaires, while plunging millions of unprepared Americans into poverty. Get the stocks at the center of it all.
Enter your email address to receive the names and ticker symbols.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

The #1 Trade For 2023

Elon Musk is set to reveal his secret “Project X” that could revolutionize a $23 Trillion industry, and potentially be 1,000x bigger than EV’s. 
This Backdoor play could hand early investors a windfall of gains.
Enter your email address to receive this company’s name and ticker symbol for free.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Every Investor Should Have This $3 AI Stock On Their Radar

Enter your email address to get access to all the details.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Project An-E

Breakthrough A.I. Just Predicted What the Stock Prices of Tesla, Nvidia, and Apple Will Be 30 Days from Now…
Enter your email address for immediate access.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

Elon Musk's "Project Omega"

It could soon mint new millionaires, while plunging millions of unprepared Americans into poverty. Get the stocks at the center of it all.
Enter your email address to receive the names and ticker symbols.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)

#1 A.I. Stock Currently Trading For $3

Gain immediate access to this revolutionary $3 A.I. stock that is set to disrupt a $15 Trillion Market soar 75X.
Enter your email address to receive the name and ticker symbol for free.


By submitting your email address, you give Profitable News permission to deliver the report or research you’re requesting to your email inbox. As a bonus, you will also get a free subscription to one of our carefully selected marketing partners. To learn more about our partners, click here. You can unsubscribe at any time. (Privacy Policy)