This Multi-Year Trend Is Just Getting Started

While the AI trend will likely keep some tech stocks jumping at times, other tech trends are also pushing one key part of the market. That’s the semiconductor space.

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  • Given the rise of technologies that require increasingly complex chips, it’s set to be a strong few years for the space. That includes hardware for AI programming. But it can also include hardware for ongoing smartphone sales and other, less exciting technology.

    One company is looking to grow faster than the rest of the space, Taiwan Semiconductor (TSM).

    The global chip manufacturer is still a ways off from opening up its new factory space in Arizona, but revenues should still grow 20 percent this year. That’s twice expectations for the rest of the semiconductor sector.

    On top of that, shares are still reasonably valued at 17 times forward earnings, and TSM sports a hefty 41 percent profit margin. TSM will likely see its valuation move higher as it continues to grow revenues and earnings.

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  • Action to take: Investors may like shares at current prices or on any pullback. TSM also pays a modest 1.9 percent dividend.

    For traders, the June $120 calls, last going for about $4.60, could see mid-double-digit returns on a further push higher in TSM shares.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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