Dan Loeb's Third Point Capitalizes On TSM's AI Expansion

Activist investor Dan Loeb‘s Third Point LLC holds a stake in Taiwan Semiconductor Manufacturing Company Ltd. TSM, which has surged around 92% in the last year, outperforming the FTSE TWSE Taiwan 50 Index’s gain of approximately 49% and the S&P 500’s growth of roughly 25.0%.

Third Point held 1.78 million shares in the contract chipmaker as of Sept. 30, 2024.

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The company reported strong fourth-quarter results and outlined positive expectations for 2025.

• On Jan. 16, the company reported fourth-quarter revenue of NT$868.46 billion ($26.88 billion), up 38.8% year-over-year, topping the analyst consensus estimate of $26.28 billion, fueled by demand for advanced processor node technologies for artificial intelligence applications. Earnings stood at NT$14.45 ($2.24) per share versus analyst consensus of $2.23.
• Taiwan Semiconductor guided first-quarter 2025 revenue of $25.0 billion-$25.8 billion versus the $24.97 billion consensus estimate.
• The company earmarked fiscal 2025 capex worth $38 billion-$42 billion (versus $29.8 billion a year ago) amid intensifying geopolitical tensions between the U.S. and China, with the former eying tougher artificial intelligence technology restrictions on the latter, citing national security concerns.
• The company extended the AI forecast horizon to 2029 and guided to a mid-40% CAGR for AI revenue over the next five years.
• Overall, Taiwan Semiconductor management noted long-term revenue CAGR inching and approaching 20% (vs. 15%-20% previously).
• Also, the company disclosed winning $1.5 billion in subsidies from the U.S. and expects the Trump administration to continue supporting chip facility endeavors under the CHIPS Act.

Talking about management’s guidance for AI revenue to double in 2025 after tripling in size, Needham analyst Charles Shi said that it does not necessarily mean the company is calling for a deceleration of non-AI growth in 2025 and may merely reflect conservatism.

It shows that management's conviction on a stronger non-AI recovery in 2025 is not quite there, adds the analyst.

CNBC's Jim Cramer stated that investors expect the Trump administration to soften some of the Biden government's advanced semiconductor technology embargo as the former took charge this week.

Investors can gain exposure to the stock via SP Funds Trust SP Funds S&P World (ex-US) ETF SPWO and SP Funds Trust SP Funds S&P Global Technology ETF SPTE.

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