Demand for Chips Shows No Signs of Slowing. Is Taiwan Semiconductor Too Expensive Now?
With TSMC controlling 70% of the global foundry market, its stock has risen dramatically throughout the AI chip craze.
Overview
The artificial intelligence (AI) chip craze can't be discussed without including the behemoth Taiwan Semiconductor Manufacturing Company (NYSE: TSM). The third-party chip manufacturer has been one of the standout stocks of the past year, up nearly 80%. That substantial rise has pushed the company's valuation past $2 trillion, but investors are starting to question how long the chip boom will last. Is TSMC too expensive now?
TSMC's growth has been impressive. In the second quarter, its revenue jumped 36% year over year, while net income and diluted earnings per share rose 77.4%. The company's strong free cash flow has given it an enviable balance sheet, and its dividend payouts have more than doubled in the past three years.
Details
Chip demand isn't slowing, and TSMC is also pursuing new opportunities. For example, it's in the process of setting up a joint venture with Sony (NYSE: SONY) to produce next-generation image sensors. That multibillion-dollar collaboration will supply high-performance camera sensors for iPhones and future physical-AI use cases. The duo is targeting mass production by 2029.
Source
Originally published at www.fool.com.