Semiconductor Giant with New Investment Plans: Taiwan Semiconductor in the Focus of the AI Industry

The current earnings season is primarily focused on the results of investments in Artificial Intelligence (AI) among S&P 500 companies. Analysts expect that profit growth will slow down, with earnings in the S&P 500 projected to rise by only 5.3% compared to the same quarter last year, down from 13.2% in the second quarter, according to a Reuters report. Particularly, the technology and communication services sectors show impressive growth forecasts: earnings in these sectors are expected to increase by 15.4% and 12.3%, respectively. Since last year, AI-related companies have dominated earnings discussions, achieving significant market gains. The S&P 500 is currently reaching record highs, supported by strong performances in the technology sectors. Howard Chan, CEO of Kurv Investment Management, emphasizes the importance of monetizing AI initiatives for large companies to positively engage in the market. A good example is Meta, whose stock price surged after strong sales forecasts underscored their effective financing of AI investments through digital advertising revenue. At the same time, the high capital expenditure by companies like Google raises questions about integrating AI into existing business models. With a price-to-earnings ratio of 22.3 for the S&P 500, exceeding the long-term average of 15.7, many investors hope the results of this quarter will justify the higher valuations. Solita Marcelli from UBS Global Wealth Management expresses optimism that the upcoming third-quarter results may trigger further stock gains, especially as the semiconductor sector remains a focus of AI investments. In light of these developments, Taiwan Semiconductor Manufacturing Company plans further investments: two new factories in Kaohsiung, Taiwan, are in preparation. These additions, named P4 and P5, are currently being planned, with environmental reviews expected soon. These announcements follow existing plans for a third 2nm factory in the Nanzih Technology Industrial Park. Construction for P1 is already underway, with mass production slated to begin next year. Delays in P2 and P3 are due to extensive soil remediation measures after the site, a former oil refinery, was redeveloped. Although Taiwan Semiconductor (TSMC) ranks seventh on our list of trending AI stocks, we believe some other AI stocks may promise higher short-term returns. For investors seeking a forward-looking company within the AI sector trading at less than five times its earnings, our report on the most affordable AI stocks might be of interest.