We recently compiled Jim Cramer’s list on Taiwan Semiconductor, Netflix, and other stocks. In this article, we’ll take a look at how Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) stands compared to other stocks on Jim Cramer’s list.
Mad Money host Jim Cramer recently expressed concern that some investors are focusing on the Federal Reserve’s next move on interest rates and are missing out on potential market opportunities. He emphasized that over the years, many in the investment community have become overly reliant on the Fed’s actions rather than focusing on individual companies and their profitability.
“Everyone who’s obsessed with the Fed’s next move is basically investing blindfolded, and as a result, they’re missing out on some of the biggest moves I’ve ever seen in my life. There will be moves from the least likely stocks. And I don’t want to see you ignore these opportunities anymore.”
Cramer said he respects Fed Chairman Jay Powell but recognizes the limits of the Fed’s influence. He said that although Mr. Powell wields great power, he cannot influence the performance of blue-chip companies that are less susceptible to business cycles. Kramer says that when companies aren’t tied to business cycles, they’re less susceptible to the Fed’s whims. However, many traders still seem unaware of this reality.
“…I needed to say something because, over the past few decades, so many people in this industry have become creatures of the Fed, rather than the corporations and the profits they generate. Unless the Fed is satisfied…unless the Fed is strong enough, these Fed watchers won’t pull the trigger and buy stocks, even if they have little to do with our central bank. They won’t even buy stocks of companies that are doing well.
He notes that fear of the Fed often extends to stocks that appear expensive based on earnings multiples, especially if investors are concerned that the Fed will have to abandon interest rate cuts to combat inflation. He emphasized. This concern could drive investors away from promising sectors such as semiconductors, he said. Kramer acknowledges the importance of being aware of the Fed’s actions, but argues that it shouldn’t become an obsession. He believes the Fed has great influence but is not omnipotent.
Although he has made clear that he does not claim that the stock market will never fall during a period of Fed easing, he does argue that there are limits to the Fed’s influence.
“I’m not saying the stock market won’t fall because of Fed easing…I’m saying there are limits to the Fed’s influence. I swear by executives who don’t flinch when they get on the microphone and talk about the pace of rate cuts.”
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our methodology
In this article, we have compiled a list of the seven stocks that Jim Cramer featured on the October 17th episode of Mad Money. Stocks listed in ascending order of hedge fund sentiment as of Q2, as quoted by insiders. Monkey’s database of over 900 hedge funds.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Close-up of a complex network of integrated circuits used in logic semiconductors.
Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM)
Number of hedge fund holders: 156
On a recent episode of Mad Money, Kramer is a big supporter of Taiwan Semiconductor Manufacturing Company (NYSE:TSM) and explained why the semiconductor giant is important in today’s climate.
“…If you didn’t listen to Taiwan Semi’s conference call last night, you missed a performance that explains what’s going on in this market, in the world.
I’m talking about the unexpected demand for chips that enable artificial intelligence. Almost all of these are manufactured by Taiwan Semi Corporation, which is an important cog in semiconductor manufacturing equipment. That way, you will know that this movement is real.
This company is the biggest and the best. Last night was a great show, especially for our customer, Nvidia. They might as well title the conference call in praise of Nvidia, since Nvidia is partnering with this great Taiwanese company to crush the conference call. I talk a lot about Nvidia, but I don’t talk about Taiwan Semi that much, but that’s wrong. You see, like most American semiconductor companies, Nvidia is really a designer company. This product is developed by Taiwan Semi. There would be no Nvidia without Taiwan Semi. ”
Mr. Kramer spoke about the company’s focus on AI-related businesses and its position in the AI industry.
“How close are they? Let me quote Dr. CC Wei, who has a Ph.D. and is Chairman and CEO of Taiwan Semi. “One of my major customers says the current demand is insane. “Well, the main customer is Nvidia.” And like NVIDIA’s formidable and obsessive CEO Jensen Huang, Wei says the demand for AI chips is “real and we believe it’s just the beginning of the demand.”
bingo. There it is. Unlike semiconductor equipment maker ASML, which recently gave a sob talk about the entire industry except AI, Taiwan Semi is focused on the cutting edge of the industry. That’s who they are. They know it because they use it. Mr. Wei said: “We have real experience.” We have been using AI and machine learning in our factories and R&D operations. Using AI, you can increase productivity, efficiency, speed, and quality to create more value. ”
He went on to explain that Taiwan Semi’s customers would say the same thing. What a contrast to the poor calls to ASML that caused so many to sell Nvidia. Panic, panic, and the chip death notice machine spun again. ”
Taiwan Semiconductor (NYSE:TSM) is engaged in the production, packaging, testing and sales of integrated circuits and various semiconductor components. As a leading player in the industry, the company is responsible for much of the world’s supply of advanced, high-end semiconductors that are essential to power many artificial intelligence applications.
The company announced its third quarter financial results on October 17th, reporting that its sales were 759.7 billion New Taiwan Dollars (1 New Taiwan Dollar = $0.031), a significant increase of 39% year-on-year. The company also saw a notable increase in its earnings per share, reaching NT$12.54, an increase of 54% year-on-year. CFO Wendell Huang said this strong performance is due to rising demand in both the smartphone and AI-related markets.
Among Taiwan Semiconductor’s (NYSE:TSM) revenue sources was its high-performance computing division, which includes chips used in AI technology. It achieved an astonishing growth of 51% compared to the previous year. This surge highlights the growing reliance on advanced computing capabilities to support AI innovation. Additionally, a recovery in smartphone sales contributed to the company’s overall performance, with the segment’s revenue increasing by 34%.
Overall, TSM ranks No. 1 on Jim Cramer’s list of most talked about stocks. While we see TSM’s potential as an investment, we believe AI stocks are more likely to deliver higher returns and do so in a shorter time frame. If you’re looking for AI stocks with more promise than TSM, but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: Morgan Stanley’s 15 best humanoid robot stocks to buy and Jim Cramer says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
