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TSMC - AI Stock Analysis

Analysis generated January 9, 2025

Taiwan Semiconductor Manufacturing Company (TSMC) is one of the most critical players in the global semiconductor industry. Founded in 1987, TSMC pioneered the foundry business model by focusing solely on manufacturing. As a result, it has grown to become the world's largest dedicated independent semiconductor foundry, serving major clients like Apple, Nvidia, and Qualcomm. With its cutting-edge technology and focus on innovation, TSMC plays a pivotal role in the semiconductor supply chain, providing chips essential for various applications from consumer electronics to artificial intelligence and automotive industries.

Fundamental Analysis

Revenue: TSMC reported a revenue of NT$760 billion in the last quarter. This marks a 12.80% increase from the previous quarter and a significant 38.95% increase from the same quarter last year. These figures indicate robust quarter-over-quarter and year-over-year growth, reflecting strong demand for TSMC's services.

Net Income: The company's net income stood at NT$325 billion for the last quarter. This represents an impressive 31.23% increase compared to the prior quarter and an even more significant 54.15% increase from the same quarter last year. This substantial growth in net income suggests effective cost management and an increase in profitability.

EBITDA: The EBITDA for the last quarter was recorded at NT$361 billion. While this value demonstrates a decline of 20.36% from the previous quarter, it shows a 58.19% increase compared to the same quarter last year. The quarter-over-quarter decline warrants closer scrutiny to understand the underlying causes, but the strong year-over-year growth indicates long-term profitability and operational efficiency.

P/E Ratio: TSMC's current price-to-earnings (P/E) ratio is 34.27, which may be considered high. This potentially indicates that the stock is overvalued, leading to a bearish outlook. Investors should carefully evaluate whether the current valuation accurately reflects future growth potential.

Technical Analysis

Stock Price: The current stock price of TSMC is NT$207.12. This represents a short-term increase of 4.33% compared to a month ago and a substantial long-term rise of 108.39% compared to a year ago, indicating a bullish trend.

Simple Moving Average (SMA10): The current SMA10 is NT$206.81, which is slightly higher than the previous SMA10 of NT$206.13. This indicates a potential upward trend in price movement, suggesting positive market sentiment in the short term.

Relative Strength Index (RSI): The RSI stands at 93.5, which is quite high and indicates an overbought condition. This could signal a bearish perspective in the near term as stocks often correct after reaching overbought levels.

Alternative Data Analysis

Job Postings and Employee Sentiment: TSMC has 534 open positions, which have increased by 6% in the last couple of months. This indicates that the company is expanding, potentially a healthy sign for future growth. Employee sentiment about the business outlook remains neutral, indicating stability in workforce satisfaction.

Customer Acquisition: The company's website garners around 750,000 visitors, but this figure has decreased by 27% in the last few months, a potentially worrisome trend suggesting a decline in customer interest or engagement.

Customer Engagement: TSMC's Twitter page has seen a 15% increase in followers, now at 10,000. This rise suggests growing interest and engagement with the company among the public and potential investors.

AI Score: According to AltIndex's AI score, TSMC has a score of 63, which is a buy signal. This comprehensive measure considers fundamental, technical, and alternative data to suggest potential buying opportunities.

Conclusion and Recommendation

Based on the analysis, TSMC presents a mixed picture. The strong revenue and net income growth, as well as the year-over-year EBITDA increase, highlight impressive profitability and market demand. The technical indicators suggest a bullish trend in the short and long term, though the high RSI indicates potential overbought conditions. Alternative data analysis shows signs of expansion, but a declining customer acquisition trend is concerning. Given these mixed signals, TSMC appears to have strong long-term prospects despite short-term concerns. Investors should consider these factors and may view TSMC as a strong potential investment while keeping a close watch on market conditions and any changes in fundamental and alternative data.

Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.