Latest news with #chipfabrication
Yahoo
10-07-2025
- Business
- Yahoo
TSMC (TSM) Named Top Pick by Morgan Stanley on Strong U.S. Expansion Incentives
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) ranks among the . On July 3, Morgan Stanley analysts referred to Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as their Top Pick and reaffirmed their Overweight rating on the company's shares. According to Morgan Stanley, TSMC's intentions for US expansion were bolstered by recently enhanced tax incentives that may lessen the long-term financial burden of its chip fabrication facilities in Arizona. Morgan Stanley stated that tax incentives for semiconductor companies expanding their capacity in the United States could increase from 25% to 35% under the most recent 'big beautiful bill' that was approved by the Senate on July 1. According to the analysts, the updated credit structure 'should lessen TSMC's profit burden for its US capacity expansion' and 'reaffirms the policy encouragement' for semiconductor manufacture in the country. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a leading Taiwanese company that offers semiconductor manufacturing services. While we acknowledge the potential of TSM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. Read More: and Disclosure: None.
Forbes
03-07-2025
- Business
- Forbes
How Lam Research Stock Gets To $200
The Lam Research Corporation logo appears on a smartphone screen in this illustration photo in Reno, ... More United States, on December 17, 2024. (Photo by Jaque Silva/NurPhoto via Getty Images) Lam Research (NASDAQ: LRCX), a prominent supplier of equipment for chip fabrication, is poised to gain from the increasing capital expenditures driven by the burgeoning generative artificial intelligence industry. While AI leader Nvidia (NASDAQ: NVDA) grabs attention with its stock price soaring more than 3 times over the last two years and its valuation approaching $4 trillion, less known companies like Lam play an essential role in the manufacturing of the AI chips that Nvidia markets. These stocks may provide a more stable value with significant potential for upside. The data is persuasive. According to SEMI, capital expenditure on advanced chip-making equipment is expected to nearly double from 2023 to 2028, and global capex spending is anticipated to exceed $100 billion in 2025 alone. Lam, which focuses on deposition and etching equipment—two of the foremost processes in chip production—may be well-positioned to seize a substantial portion of this investment. The company's primary clients include industry titans like TSMC, Samsung, and Intel, establishing it as a key player in both the logic and memory sectors of the chip market. Although traditionally dominant in memory chips, Lam is broadening its footprint in advanced logic chips and packaging technologies—fields that are witnessing increasing demand as chip design complexity escalates. AI tasks require not just advanced processing power but also high-bandwidth memory (HBM) and intricate stacking architectures. For instance, the fabrication of HBM chips is three times more wafer-intensive than standard DRAM because of lower bit density and the requirement for 3D stacking. This results in a direct increase in demand for tools manufactured by companies like Lam. How Lam Stock Can Reach $200 Whereas chip designers such as Nvidia have experienced skyrocketing valuations, Lam's stock has lagged. Shares have decreased by approximately 9% over the past 12 months and presently trade at around 24 times forward earnings, while Nvidia trades at about 35 times. Indeed, the valuation disparity is partly attributable to Lam's reliance on China, which represented 31% of revenues in the March quarter. Ongoing U.S. export restrictions have impacted this segment, likely restricting Lam's capacity to capitalize on the substantial Chinese market. According to consensus estimates, Lam's revenues are projected to grow by around 22% in FY25, although growth is expected to cool to roughly 2% in FY'26, in part due to these China-related challenges, with earnings also expected to remain flat. Nonetheless, if heightened demand related to AI, combined with a possible relaxation of chip equipment export restrictions to China, leads to sustained revenue growth at FY'25 rates of about 22% annually over the next three years, Lam's revenue could increase by around 1.8 times. Even if profit margins stay near current levels of 27% (as recorded over the first nine months of FY25), and if the valuation multiple rises to about 30 times (up from 24 times currently, a 1.25 times growth), the stock could potentially double from the current price of approximately $97 to over $200 per share. Several scenarios could lead to this outcome. Last week, the U.S. and China established a trade framework that encompasses rare earth exports and a potential relaxation of technology restrictions. If this easing of tensions applies to chip equipment exports, companies like Lam might gain renewed access to a vital growth market, further enhancing revenues. Furthermore, the process of chip manufacturing is becoming increasingly capital-intensive, meaning that a larger portion of the chip's expense is now equipment-related—a distinct advantage for companies like Lam. Additionally, advanced packaging methods, such as stacking and connecting multiple chips, which are already being used for AI tasks, should boost the demand for Lam's high-end machinery. Risks Also Exist Certainly, Lam faces significant risks. Beyond the China issue, the memory chip arena, where Lam has historically excelled, is encountering pricing pressures. Flash memory prices have been declining due to decreased demand from consumer markets and capex in this sector has been subdued as key players reduce production. Additionally, geopolitical tensions, macroeconomic uncertainty, and U.S. tariffs could further obscure Lam's short-term growth prospects. Although Lam is a highly specialized company with robust intellectual property, it may not enjoy the same protective barrier as a firm like ASML, which essentially has a monopoly over its trade of extreme ultraviolet lithography. On the other hand, Lam faces numerous competitors, such as Applied Materials and Tokyo Electron, which also provide similar services. That said, the long-term upcycle appears to be secure. The global semiconductor market is forecasted to surpass $1 trillion in annual revenue by 2030, rising from approximately $624 billion in 2024 according to the Wall Street Journal. As chip manufacturers adopt next-generation technologies to enable AI, the demand for sophisticated manufacturing tools is likely to remain high, directly benefiting Lam. While investing in a single stock like LRCX entails risk, the Trefis Reinforced Value (RV) Portfolio has outperformed its all-cap stock benchmark (a combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices), delivering robust returns for investors. What accounts for this? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks offered an adaptive means to maximize the advantages of favorable market conditions while curbing losses when markets decline, as outlined in RV Portfolio performance metrics.
Globe and Mail
16-06-2025
- Business
- Globe and Mail
1 No-Brainer AI Stock That Could Soar By 150% In 5 Years
The long-term returns for the broader stock market are about 10% annually, which causes the market to double around once every seven years. So, if you can pinpoint stocks that can soar 150% over the next five years, you'll have a great chance of beating the market with some margin of safety built in. One AI stock I've identified that can achieve that is Taiwan Semiconductor Manufacturing (NYSE: TSM). Taiwan Semiconductor is the leading chip fabricator worldwide and has nearly every big tech company as a client for its chips. Thanks to Taiwan Semiconductor's positioning, it can accurately project years into the future, which is where the 150% return level comes from. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » If you want to add another stock to your portfolio or increase your current TSMC holding, now could be an excellent time before the market wakes up to Taiwan Semiconductor's substantial opportunity. Taiwan Semiconductor is positioned to succeed over the next five years Taiwan Semiconductor, or TSMC, is a chip fabricator, and these orders are often placed years in advance due to high demand. For example, Taiwan Semiconductor's existing Arizona facility already sold out production through 2027, which means it likely has orders in its system for that facility through at least 2028. While there are some tariff concerns, semiconductors are exempt from reciprocal tariff levies as of this moment (although that could easily change). Furthermore, TSMC's CEO C.C. Wei stated in its first-quarter conference call that "we have not seen any change in our customers' behavior so far" when commenting on tariffs. Taiwan Semiconductor is more than generous with information to investors, offering monthly revenue updates throughout the year. In April, its revenue (in New Taiwan Dollars) was up 48% year over year and 40% in May. These numbers can fluctuate from year to year depending on how many working days there are from year to year (there were 23 working days in May during 2024 while only 22 in 2025), but it's still useful to check in on TSMC to get an idea of any large demand shifts. Clearly, Taiwan Semiconductor is doing great, but the 150% increase projection deals with the next five years, not the next five months. Management's long-term guidance given at the beginning of 2025 was for the company to grow AI-related revenue at a compounded annual growth rate (CAGR) of 45% for the next five years. That means AI-related revenue will rise 541% over the next five years. Overall revenue is expected to rise at nearly a 20% CAGR. If it achieves that level, then revenue will increase at a 149% pace. With fully mature companies like Taiwan Semiconductor, stock performance can be tied to revenue growth if margins aren't shrinking. Otherwise, returns are highly correlated to profit growth. As long as TSMC maintains its margins, profit and revenue growth likely will be equal. However, there is one caveat to this argument. Taiwan Semiconductor's stock trades at an attractive level Correlating stock returns with revenue growth is only true if the valuation is reasonable. A contracting multiple can wipe out a ton of revenue growth, but fortunately for investors, TSMC is valued at a reasonable level. At 22.9 times forward earnings, Taiwan Semiconductor is trading at nearly the same level as the broader market, as measured by the S&P 500 index, which trades at 22.5 times forward earnings. TSM PE Ratio (Forward) data by YCharts Common sense would lead investors to believe that because TSMC is expected to grow faster than the market, it should be valued at a premium to the market, but that's not the case. This mismatch will allow investors the chance to make a huge profit from buying and holding TSMC's stock for the next few years. Taiwan Semiconductor is one of the best stocks to buy on the market, and with its neutral position in the AI arms race, it's about as close as it gets to a surefire investment in the AI realm. Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now? Before you buy stock in Taiwan Semiconductor Manufacturing, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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