Chipstock was hit violently on Monday with the release of Deepseek in China’s artificial intelligence (AI) chatbot. Several major AI shares had a two -digit one day loss.
Investors were shaken because the creator of DeepSeek was able to build a model at a very low cost, like Chatgpt in Openai and other industries with non -powerful chips. 。 The investor responded to a more powerful competition for high -tech companies in the United States and the weakest competition of chipstock growth, causing blood bathing in a widespread technology industry.
This threat of decline in chip prices and demand sent Taiwanese semiconductors (TSM 0.56 %) It dropped 13.3 % on January 27.
However, the sale seems to be an overreaction. The impact of Deepseek is still unknown, and increasing the efficiency of AI model buildings and training may increase the overall demand for semiconductors that can actually power them.
In other words, the sale can be a good opportunity for Taiwan Semiconductors, a long -standing winner in the market. Keep reading to check the three reasons for purchasing shares.
Image source: Getty image.
1. Domination of important markets
Taiwan Semiconductors may be the strongest companies that most investors have never heard.
The company is operating behind the high -tech industry for partners such as Apple, NVIDIA, Broadcom, and AMD. This is the world’s largest third party chip manufacturer. TSMC manufactures most of the world’s contracted chips, with advanced chips and a market share of about 90 %.
Semiconductors are very important in the world economy. In other words, TSMC plays an important role in a wide range of products, such as home appliances, appliances, and infrastructure.
The strength of its technology has given the company a great competitive advantage, and rivals such as Intel and Samsung are recent upright, gaining market share.
2. The financial results are still impressive
In the AI era, the growth of TSMC has accelerated and its profit margin is increasing.
Profit increased to $ 26.9 billion to 39 % in the fourth quarter, reporting a 49.0 % operating margin of 41.6 % to the same period of the previous year. The company has benefited from rising chips and increasing profits from advanced chips.
TSMC issued a powerful guidance in the first quarter, but there is a better reason than betting on stocks for a long time. New fabs are rapidly opened around the world, including the United States (Arizona and Ohio), Europe, and Asia, and will receive at least $ 6.6 billion from the Chips Law. These investments continue to lead the industry, while the company keeps leading the industry and reduces the risk of concentrating production footprints in Taiwan.
3. Price is correct
Finally, Taiwan Semiconductors are currently trading with attractive evaluation. Chip strains are traditionally traded with a lower evaluation than software stock, because they are susceptible to industrial cycle. However, considering the growth rate, the stock price looks like stealing so far. This is 28 with S & P 500 prices and income ratings.
If the company has the risk of Deepseek, AI other headwinds, or the periodic nature of the semiconductor industry, they seem to be priced sufficiently in the current evaluation.
Overall, Taiwan and Semi have a wide range of economic pairs in important industries dominated. TSMC looks like a large long -term purchase due to powerful prospects in the AI era and this attractive price stock.
Jeremy Bowman is the position of Advanced Micro Devices, Broadcom, NVIDIA, and Taiwan Semiconductor Manufacturing. Motley Fool has appeared and recommended in Advanced Micro Devices, Apple, Nvidia, and Taiwanese semiconductors. Motley Fool recommends Broadcom. Motley fools have a disclosure policy.
