Latest Developments:
Taiwan Semiconductor (TSM) posted strong results for 2Q24, with revenues and EPS growing by 40.07% and 36.38%, respectively. The demand for advanced chips, particularly in high-performance computing driven by AI, continues to boost growth. TSM maintains a technological lead, with over 67% of its wafer production revenue coming from advanced nodes. The company’s optimistic guidance for 3Q24 signals continued momentum, though some margin pressures are expected due to new fabrication plants coming online.

Investment Case:
TSM is well-positioned to capitalize on the AI investment supercycle, benefiting from structural demand for advanced chips. Its dominance in advanced node technologies, with a 90% market share, ensures that TSM will remain a key player as competitors like Intel and Samsung face challenges. Additionally, government subsidies globally are providing further tailwinds for TSM’s expansion. However, geopolitical risks, particularly regarding tensions between China and Taiwan, remain a significant concern.

Company's Valuation:
TSM's ADS listed in the United States is fairly valued at $180.05, but there is a 19% upside potential in shares listed in Taiwan, with a target price of NT$1,162.65. This presents an attractive arbitrage opportunity for sophisticated investors, who can potentially capitalize on the price difference between the two exchanges.

Disclaimer: The above is an excerpt on a report written by our close associate, Selendis Research. Check out the full report here on Seeking Alpha. All information provided is intended solely for general informational purposes. Seven Insights does not take into account individual financial goals or situations and does not provide personalized investment advice. Seven Insights is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank.