Main financial assets discussed:
- Taiwan Semiconductor (TSM)
- Texas Instruments (TXN)
- Broadcom (AVGO)
Top 3 key points:
1. The stock of Taiwan Semiconductor has appreciated significantly since October 2022, but the author is skeptical about its prospects after such a large increase.
2. The company's valuation metrics have changed since October, with a forward 1Y P/S ratio of 6.2. However, if consensus revenue estimates hold true, the current valuation could be justified.
3. The company operates in a growing industry with strong long-term demand for semiconductors, but it also faces risks related to geopolitical tensions and potential recessions.
Recommended actions: **Hold**. The author believes that Taiwan Semiconductor is a strong company worth being exposed to, but investors should take precautions and protect their portfolios due to the unique risks associated with the company. The current valuation is considered fair, but a margin of safety is recommended.
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Taiwan Semiconductor Manufacturing (TSM), Adobe, and Salesforce are three AI-oriented stocks that have the potential to reach a market valuation of $1 trillion by 2035.
Emerging markets, particularly China, are facing challenges such as weak economic activity, real estate debt issues, regulatory environment, and market concentration, while the U.S. market is performing well; however, emerging markets outside of China, like India, are showing promise due to supply chain diversification, infrastructure investment opportunities, and a pro-business government. Other attractive markets include Taiwan, South Korea, Vietnam, the Philippines, and Indonesia.
Semiconductor stocks that leverage the AI market and are priced reasonably are discussed in a video created by Jose Najarro, an affiliate of The Motley Fool, who also discloses his positions in Taiwan Semiconductor Manufacturing, while The Motley Fool itself has positions in and recommends ASML and Taiwan Semiconductor Manufacturing.
Emerging-market stocks have faced a challenging quarter due to various factors, but some experts believe this presents an opportunity for a potential rebound, with emerging-market stocks excluding China having outperformed developed-market stocks excluding the U.S. so far this year.
