Bill 'Latency Lord' Brennan
Fundamental Growth Investor, B2B/Sector Leaders & Picks-and-Shovels
TSMC's growth is constrained by capacity, so its growth rate is already known and priced in. x.comÂ
TSMC may face its 2000 Cisco moment if the 10-year/3-month Treasury spread keeps steepening instead of crashing back into inversion. If TSMC's strong-demand view is right, the spread should reinvert to extend the cycle, as in 2022; instead it is approaching +80bp after un-inverting, which signals it's really time. x.com x.comÂ
TSMC trades at its historical average valuation in the midst of its industry's largest investment cycle. The world's most important company is at 17.5x forward earnings, in line with its 10-year average. x.comÂ
Intel lacks the leading-edge capacity to justify its premium valuation and cannot fund the buildout cheaply. It can't raise $40 billion of debt at its cost of capital, and its pricey equity demands heavy capex and capacity execution. Reaching even half of TSMC's leading-edge capacity would take over $100 billion more in fabs, and TSMC would have to pause. x.com x.comÂ
Intel is overvalued after running up about 5x from $20, with more capex, low operating margins and a run-up driven largely by Trump's promotion rather than fundamentals. TSMC earns over 30% operating margins and is ahead of schedule in Arizona, so Intel has no US fab monopoly. Trump leaves office in two years, and these fabs are unlikely to meaningfully improve on existing 2nm yields. It could still be a great trade. x.com x.com x.com x.com x.comÂ
TSMC's discounted cash flow scenario puts fair value at $389, with the stock shown as 12% below that level. The scenario assumes 30% free-cash-flow growth over the next five years, a 25x terminal multiple and a 15% required return; the valuation is labeled reasonable, with a warning to take the estimate with a grain of salt. x.comÂ
TSMC looks like it has put in a blowoff top, rising even on an announcement that it cannot afford new ASML equipment. x.comÂ
AMD's fundamentals are very strong, but about 50x 2028 estimated earnings is a price that cannot be normalized for any company, under an investment philosophy that may be wrong. Per PrivPubInvestor, the stock rose from $450 to almost $650 in two weeks on CPU demand, analyst price-target hikes, new partnerships and the Helios rollout. x.com x.comÂ
Institutions are aggressively positioning for TSMC to move higher. A $30M put seller took 9/18 puts at the $440 strike, $25 above spot, a very aggressive, very short-dated bet. The weekly chart shows wildly clean institutional accumulation and clearly inefficient pricing below the $440s. x.com x.comÂ
AMD is too overvalued for the current market risk, even after good earnings, and its fundamentals will take time to catch up to the valuation, meaning a period of stagnation. Per Wall St Engine, Q2 revenue rose 50% to $11.5B with data center sales up 107%, and Q3 revenue guidance of about $13.0B topped estimates. x.com x.com x.com x.com x.comÂ