Taiwanese tech and TSMC face punchy valuations
The bear case for Taiwan's tech sector, specifically TSMC, is that valuations have become excessively high due to the speculative AI narrative, making them fragile.
The argument
The guest pointed out that TSMC now makes up 13% of the EM benchmark (up from 4.5% a few years ago) and trades at a punchy 65x CAPE. He argued that while TSMC is a solid company, other Taiwanese tech companies riding the AI wave have similarly high valuations but possess much weaker competitive moats.
The thesis, stress-tested
✓ What validates it
- ✓A derating or correction in AI-related tech stocks globally
- ✓Earnings misses or slowing growth guidance from TSMC or Taiwanese hardware suppliers
▸ Risks discussed
- ▸Continued momentum in the global AI trade could keep valuations elevated
- ▸TSMC's dominant market position may justify a premium valuation to some investors
Hear it yourself
"And then in Thai and in Taiwan, then you have this one amazing company. It's a very good company. TSMC is making 13% of the benchmark nowadays. It went from 4.5% a couple of years ago to 13% today And it's trading at 65 times Cape. That's I think that's punchy."
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