Veteran investor connects with Taiwan Semiconductor after sales
This has nothing to do with the car.
Duesenberg Automobile & Motors Co. was an American racing and luxury car manufacturer founded in Indianapolis in 1920.
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The company is known for popularizing the straight-eight engine and four-wheel hydraulic brakes, and Duesenberg made the first American car to win a Grand Prix race.
People would often refer to a Duesenberg vehicle as "a doozy," but the car's nickname is not related to the word meaning "extraordinary," "outstanding" or "one of a kind."
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That doozy had staked its place in the vernacular years before the Duesenbergs hit the road.
And it's this definition that TheStreet Pro's Chris Versace employed in his recent column, "TSM’s Quarterly Sales Bonanza Boosts Outlook for Several Portfolio Stocks."
"September sales from Taiwan Semiconductor landed this morning, and, boy, was the report a doozy," he said.
TSCM shares surged from last year
"Sales for the month rose just shy of 40% year over year, bringing the company’s September-ending quarter sales up a staggering 39% year over year and up just over 6% compared to the previous quarter," Versace added.
TSM produces high-end semiconductors for such tech superstars as Nvidia, Apple, Advanced Micro Devices (AMD) and Marvell.
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While the company does not offer any end-market color in these monthly revenue reports, Versace said, judging by recent comments from Nvidia (NVDA) CEO Jensen Huang pointing to AI chip demand being “insane” and Hon Hai Chairman Young Liu that demand is “crazy,” “we can deduce TSM’s High-Performance Computing segment revenue was robust.“
The HPC segment is important as it houses TSM's artificial-intelligence and data-center chip revenue, and Versace says the current quarter is shaping up very nicely, not only for Nvidia but for Marvell (MRVL) as well.
Versace wrote about Hon Hai in an earlier column, saying the company's September revenue rose almost 34% sequentially and more than 10% from a year earlier.
"The company shared that it saw strong demand for AI servers continuing, which pushed its Cloud and Networking Products segment ahead while new product launches for its Smart Consumer Electronics segment led to strong sequential growth," he said.
Taiwan Semiconductor (TSM) shares are up nearly 79% year-to-date and have more than doubled (up 109%) from a year ago.
The research firm TrendForce estimated that the company's share of global foundry revenue this year will be about 64%, up from 51% in 2019, The Wall Street Journal reported.
MediaTek, the world's top smartphone-chip developer by shipments said on Oct. 9 that its new 5G mobile chipset, the Dimensity 9400, is made with Taiwan Semi’s latest generation 3-nanometer process technology, which Apple (AAPL) uses for its AI-capable iPhone 16 series, according to Nikkei Asia.
The chip sector has been posting some impressive numbers lately.
Global semiconductor sales hit $53.1 billion in August, the Semiconductor Industry Association said, up 20.6% from a year earlier and 3.5% higher from July.
“The global semiconductor market continued to grow substantially in August, hitting its highest-ever sales total for the month of August, and month-to-month sales increased for the fifth consecutive month,” John Neuffer, SIA president and CEO, said in a statement.
TheStreet Pro looking forward to TSCM earnings report
“Year-to-year sales increased by the largest percentage since April 2022, driven by a 43.9% year-to-year sales increase into the Americas, and month-to-month sales were up across all regions for the first time since October 2023," he said.
Versace said the next potential catalyst for Nvidia and Marvell shares would be AMD's “Advancing AI” event, which kicked off on Oct. 10.
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"We’ll be looking for comments from [AMD] CEO Lisa Su that back the color comments from Nvidia’s Jensen and Hon Hai’s Liu," he said. "If Su’s comments don’t match that degree of enthusiasm, it could solidify the view that Nvidia is that much further ahead than AMD."
Su gave the keynote address at the event, according to IT Pro, and said that AMD is "really committed" to driving open innovation in high performance computing and AI infrastructure.
"When TSM reports its quarterly results next week, we’ll get more color on its end-market breakdown, including how strong HPC was over the three months compared to year-ago levels," Versace said. "That may give us reason to revisit our NVDA price target, which currently sits at $155."
The quarterly deep dive will also provide color on the smartphone market, he added. That's TSMC’s second largest market behind high-performance computing.
"That, along with its conference-call comments about the smartphone and PC markets, will be the next known catalyst for our shares of Qualcomm (QCOM) , Universal Display (OLED) , and Apple," Versace said.
With this report in hand, he added "we reiterate our One ratings on NVDA, MRVL, QCOM and OLED shares."
"We continue to think the phased rollout of Apple Intelligence will lead to an extended iPhone upgrade cycle, keeping us bullish on AAPL shares over the medium to longer term," Versace said.
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