Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

$Taiwan Semiconductor (TSM.US)$ After the third-quarter performance and guidance exceeded expectations, the stock price soared 13% on Thursday, causing a warm response on Wall Street. Taiwan Semiconductor's outstanding performance has led chip stocks to rise one after another.$NVIDIA (NVDA.US)$Rising by 3%,$Qualcomm (QCOM.US)$Rising by 2%,$Broadcom (AVGO.US)$Increased by 4%, $Advanced Micro Devices (AMD.US)$ and $Intel (INTC.US)$ Each increased by 1%, $Micron Technology (MU.US)$Increased by 3%. Wall Street has released reports bullish on the future prospects of Taiwan Semiconductor.

Needham has maintained a buy rating on the stock and set a target price of $210. Analysts led by Charles Shi stated, "TSMC delivered a geyser-like quarterly report, with revenue, gross margin, operating margin, and guidance all far exceeding general expectations".

TSMC currently expects capital expenditures in 2024 to be slightly above $30 billion and even higher in 2025. However, analysts view this as a $1 billion cut from this year's capital expenditure budget.

Analysts state that due to relatively lackluster quarterly capital expenditures in the first three quarters of this year (approximately $6 billion per quarter), the capital expenditure guidance suggests capital expenditure will almost double to around $12 billion in the fourth quarter of 2024, likely driven by the initial N2 expansion.

TSMC's 3nm process technology contributes to 20% of total wafer revenue, while the 5nm process technology accounts for 32% of total wafer revenue.

Analysts indicate that TSMC's third-quarter performance shows much stronger results in N3 compared to Needham's estimates, while the performance of N5 is slightly weaker. The growth of N3 is primarily driven by Apple (AAPL.US), while the revenue of N5 seems to stabilize after six consecutive strong growth quarters.

TSMC Chairman and CEO C.C. Wei stated at the company's financial report conference call that the revenue contribution of server AI processors will more than double this year, reaching around 15% of total revenue by 2024.

According to TSMC management's comments, analysts estimate that the company's AI revenue last year was about $4 billion and could reach $13 billion this year. Analysts have indicated that TSMC has provided guidance that AI will account for 20% of total revenue by 2028. If the company maintains a compound annual growth rate of over 15% in total revenue over the next four years, this could result in over $33 billion in revenue.

Shi and the analyst team mentioned that TSMC's income distribution between technology nodes in the report indicates that non-wafer revenue (mainly from packaging) increased significantly from $2.4 billion in the second quarter of 2024 to $3.2 billion in the third quarter of 2024, representing a 36% growth.

This may be partly attributed to Apple's drive for InFO revenue growth, which seems to be higher than seasonal growth rates (approximately 20% sequentially), and indeed supports rumors of TSMC increasing its CoWoS (Chip On Wafer On Substrate) production capacity by 60% to 80% in the third quarter of 2024.

In addition to Needham, Bank of America also maintained a buy rating for TSMC. Analysts raised the stock's target price to NT$1,400, reflecting a 35% upside, to mirror the company's strong third-quarter performance and fourth-quarter guidance, improved AI capabilities, and solid industry leadership.

Analysts added that the continued growth in capital expenditures in 2024 and optimistic tones for 2025 further support this outlook. The positive fourth-quarter guidance has also increased their confidence in future growth.

Analysts mentioned that thanks to advancements in AI technology, TSMC's valuation remains attractive, with factors such as Nvidia's Blackwell acceleration, increased N3 production, rising demand for advanced nodes, higher average selling prices, and market share gains all driving the company's structural profit growth.

The bank added that despite concerns about recent demand, they reiterated their buy rating.

The company's demand outlook is very optimistic, as strong demand for artificial intelligence marks the beginning of a long-term trend. In addition, non-artificial intelligence businesses are gradually stabilizing and recovering. Analysts added that the personal computer and smart phone business (accounting for about 45% to 50% of revenue) are benefiting from the rapid growth in silicon area.

Beyond 2026, due to the high demand for N2 and A16 technologies and TSMC's leading position in technology, TSMC's growth prospects remain strong. Analysts expect competition to continue easing. The bank additionally stated that TSMC anticipates significant orders from American integrated device manufacturers (IDMs) and has no interest in acquiring their wafer factories.

Bank of America believes that the risk of antitrust issues is limited, as the company holds only about 30% of the total addressable market (TAM) in the foundry 2.0 space, and its market conduct does not meet the standards of antitrust concerns.

In addition, analysts also indicated that $ASML Holding (ASML.US)$Slowing shipments may indicate long-term improvements in contract manufacturing supply or demand, further consolidating Taiwan Semiconductor's market position.

Editor / jayden