As earnings season kicks off, Jim Cramer of Mad Money offered insights on what investors should watch in the coming week on Wall Street. He highlighted the anticipated reports from several major banks, along with a few other companies, as key events to monitor.
Cramer expressed optimism about the current market conditions, noting that the situation aligns with his previous predictions that the market would thrive once the Federal Reserve began reducing interest rates while the economy remained strong. He remarked on the spectacular earnings reported by some major banks on Friday, emphasizing that this positive news is particularly impactful now, as opposed to previous instances when the Fed was tightening, causing good news to go largely unnoticed. Cramer believes that with the Fed now supportive of the market, there is potential for more favorable times ahead.
Looking to Monday, Cramer predicted that the focus will shift away from earnings reports due to other significant developments over the weekend. He mentioned the anticipated unveiling of a Chinese stimulus package and noted that although the rally in China has stalled, it could regain momentum if the Chinese government injects substantial funds into real estate and the stock market.
“Now, on Monday, we won’t be focused on earnings. There’s a lot of other stuff happening over the weekend. For instance, I think we’ll be parsing the Chinese stimulus package that’s going to be unveiled. The China rally is stalled, but it can get rolling again if the Chinese Communist Party keeps throwing tens of billions of dollars for the stimulus at real estate, at the stock market.”
Cramer warned that the financial sector will face a significant test on Tuesday, as different banks will be reporting their earnings. Cramer reminded investors that we are just at the beginning of one of the year’s four reporting periods, which can be chaotic and open to various interpretations.
“We’re at the beginning of one of the year’s four reporting periods,” he said. “They’re jumbled. They’re open to a lot of interpretation. They’re fast. So listen to the calls, ponder a moment, and only then should you pull the trigger.”
Cramer is Talking About These 14 Stocks Before Earnings
Our Methodology
For this article, we compiled a list of 14 stocks that are slated to release earnings this week and were discussed by Cramer during his episode of Mad Money on October 11. We listed the stocks in ascending order of their hedge fund sentiment as of the second quarter, which was taken from Insider Monkey’s database of more than 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Jim Cramer is Talking About These 14 Stocks Before Earnings
14. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders: 35
Cramer predicted that Walgreens Boots Alliance, Inc.’s (NASDAQ:WBA) numbers for the upcoming quarter will not be great. He commented:
“We probably won’t like what we see when we get the numbers from Walgreens, though. But the bar’s so low at this drugstore that maybe it won’t even matter. Yeah, it’s been that bad.”
Walgreens Boots Alliance (NASDAQ:WBA), a prominent name in the retail pharmacy sector, has a rich history spanning 170 years of service to communities worldwide. With over 12,500 locations across the United States, Europe, and Latin America, the company connects with millions of customers and patients daily. Its diverse portfolio includes well-known brands such as Walgreens, Boots, Duane Reade, the No7 Beauty Company, and Benavides in Mexico, as well as healthcare-focused investments in various countries, including China and the U.S.
Despite its extensive network and brand recognition, Walgreens Boots Alliance (NASDAQ:WBA) faces significant challenges, particularly concerning drug reimbursement pressures. The impact of pharmacy benefit managers (PBMs) has created a difficult environment for pharmacies, sometimes resulting in losses when filling prescriptions, including those for popular GLP-1 weight-loss medications.
Additionally, as a result of an effort to expand into primary care services, the company encountered setbacks with its joint venture with Cigna, known as VillageMD, which resulted in a $12.4 billion impairment charge earlier this year.
To address ongoing financial pressures and improve profitability, the company is implementing a turnaround strategy that includes closing a considerable number of store locations in the coming years. The company has identified that nearly 25% of its stores are unprofitable and plans to focus on consolidating locations that are too close to one another, are not financially viable, or are struggling with theft issues.
13. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 62
Cramer said that Morgan Stanley (NYSE:MS) stock was troublesome for some time but since the new CEO stepped in, buyers have been inching in.
“Morgan Stanley was a real headache for a while as the bears kept tearing apart their wealth management business. Not anymore, though. Ever since Ted Pick came in as CEO at the beginning of the year, we’ve seen buyers swarm in on any weakness. Stock’s had a big run, but you know what? It still yields 3.3%. I say hold on for the ride.”
Morgan Stanley (NYSE:MS) provides a range of financial products and services, ranging from capital raising and financial advisory to brokerage and investment management. In January, Ted Pick, a seasoned executive with over thirty years of experience at the company, succeeded James Gorman as chief executive officer. Pick has articulated a clear focus for the organization, emphasizing continuity in the strategic direction set by his predecessor. He has previously said that he seeks to uphold the bank’s established culture while striving to meet ambitious financial objectives, including a target of $10 trillion in client assets and a 20% return on equity.
On October 4, HSBC upgraded Morgan Stanley (NYSE:MS) to Buy from Hold with a price target of $118, up from $103. Analysts at HSBC suggest that the prolonged period of underperformance in the stock may be nearing its end. They cite the strength of its investment banking and wealth management divisions as factors that are likely to benefit from favorable market conditions, which should improve the firm’s financial results.
Moreover, concerns regarding net interest income have been viewed as exaggerated, especially in light of the company’s fee-based asset flows and the growth of management fees within its wealth management sector.
12. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 64
The Procter & Gamble Company (NYSE:PG) is set to release its earnings report on October 18. Cramer expressed concern about the company’s performance in China, saying:
“Friday, we hear from Procter & Gamble. And I fear what they’re going to say about China. Last quarter, their Chinese numbers were terrible. I don’t know if they can change that in just three months. The stock went up to $171 today, that worries me. I think it’s too hot. We sold the stock for the Charitable Trust this week. I think there are better places to be.”
Procter & Gamble (NYSE:PG), a leading name in the consumer packaged goods industry, operates globally, providing an extensive range of products that cater to various everyday needs. With a portfolio that holds personal care items, grooming products, health care solutions, and household cleaning supplies, it has a variety of trusted brands. From hair care and shaving essentials to oral hygiene, laundry, and family care products, the company has established itself as a household staple.
In recent years, Procter & Gamble (NYSE:PG) has navigated the challenges presented by the pandemic and the current inflationary environment effectively. The company has been able to implement price increases while maintaining customer loyalty, leading to a significant increase in organic sales. For fiscal 2024, which concluded on June 30, it reported a 4% rise in organic sales, largely fueled by a combination of higher sales volumes, price adjustments, and an uptick in sales of premium items. The core earnings per share saw an increase of 12%.
Additionally, the company is focused on returning value to its shareholders, which is evident in its substantial dividend payments and share repurchase programs. In fiscal 2024, the company distributed $9.3 billion in dividends and allocated $5 billion for share repurchases. The company’s recent guidance for fiscal 2025 shows expectations for approximately $10 billion in dividend payments and between $6 billion to $7 billion in stock repurchases.
11. Schlumberger Limited (NYSE:SLB)
Number of Hedge Fund Holders: 67
Cramer has recently expressed disappointment that the stock has not gone up as much as he would have expected but also called it “the best of breed”. He discussed Schlumberger Limited’s (NYSE:SLB) performance in the context of the anticipated lowering of oil prices. He said:
“SLB reports, and the old Schlumberger just hasn’t been able to catch fire despite the bounce in oil for the last two weeks. Sure, it’s up a high single digits on a percentage basis, but a number of oil service companies had a tough time because the Saudis keep saying that oil prices could be low for long and you don’t want to go against the Saudis.”
Schlumberger (NYSE:SLB) specializes in areas such as carbon management and the integration of energy systems, addressing various aspects of the energy landscape. The company’s operations include reservoir interpretation, well construction services, and evaluations of subsurface geology, all vital components for optimizing exploration and production activities.
On September 30, Schlumberger (NYSE:SLB) announced the establishment of Turnwell Industries LLC OPC, a joint venture formed in collaboration with ADNOC Drilling Company and Patterson-UTI. The partnership plans to use advanced innovations in artificial intelligence, smart drilling design, and sophisticated completions engineering, with the goal of expediting the United Arab Emirates initiatives in unconventional oil and gas development. The venture targets the completion of an initial 144 wells by the end of 2025.
Within this structure, ADNOC Drilling will maintain a 55% majority stake, while Schlumberger will hold 30%, and Patterson-UTI will possess the remaining 15%. The company will provide various integrated services, including drilling, stimulation, and completion solutions, as well as project management and digital capabilities to ensure the venture’s success.
10. The Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 68
Mad Money’s host recently said, “As for Goldman Sachs, where I did work at one point, I think it’s going to blow away the numbers and the stock goes higher.”
The Goldman Sachs Group, Inc. (NYSE:GS) is a prominent financial institution specializing in a range of financial services, with a core focus on investment banking and wealth management. Renowned for its expertise in investment banking, the company has established itself as a leader in areas such as equity and debt underwriting, advisory services for mergers and acquisitions, and comprehensive wealth management solutions. The firm operates a significant trading desk, engaging in lending activities to corporate clients while also investing its own capital across equity and debt markets. Furthermore, it manages trillions of dollars in assets on behalf of its clients, reflecting its extensive reach in the financial sector.
In asset and wealth management, Goldman Sachs (NYSE:GS) reported strong growth in its management and advisory fees, with a record of $3.2 billion achieved in the second quarter alone. Its Assets Under Supervision reached an all-time high of $2.9 trillion, while total client assets within wealth management increased to approximately $1.5 trillion.
Goldman Sachs (NYSE:GS) recorded a margin of 23% for the first half of the year. The company also made significant strides in alternative investments, successfully raising $36 billion year-to-date. It includes the completion of several key fund closings, with $20 billion allocated to private credit strategies and around $10 billion directed toward real estate investments.
With a strong pipeline, the company expects to surpass $50 billion in fundraising for alternatives this year, a goal supported by unexpectedly high fundraising activity in the first half. Additionally, the company made an announcement regarding its dividend policy, increasing the quarterly dividend by 9%. Since early 2019, it has tripled its quarterly dividend, now standing at $3 per share.
9. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 68
Cramer likes American Express Company (NYSE:AXP) stock and has been recommending it for a while now. He explained:
“Finally… one of my favorite companies, American Express. The last two times it got hit, I told you to buy it. That was right. Maybe the third time’s the charm, and it won’t even go down. The Amex conference call is a great affair because the company gives you so much information about who’s spending, what people are doing. Gen X, Gen Z, they got it all. If you monitor this one, if it gets hit, I’m going to tell you, it’ll probably be a buy. It’s been right and I’m not going to change my view.”
American Express (NYSE:AXP) is a financial services provider, best known for its credit and charge card offerings, as well as its banking solutions and expense management services. Recently, in an episode of Mad Money, Cramer discussed the stock’s recent downgrade by JPMorgan, which shifted its rating from Buy to Hold. Cramer expressed concerns about the timing of this decision, especially considering the potential for a rate-cutting cycle in the near future. He suggested that selling shares at this point could result in missing out on future gains as the stock may rebound quickly from such downgrades.
In the second quarter, American Express (NYSE:AXP) reported total revenue of $12.6 billion, with an impressive 77% generated from non-interest income. The income primarily comes from discount revenue earned from merchants and various fees charged to cardholders.
Furthermore, on October 14, Monness Crespi raised the price target on the stock to $300 from $265 and kept a Buy rating ahead of the company’s upcoming third-quarter results. The changes are owed to updates to the firm’s quarterly estimates, particularly for the calendar year 2025. The analysis also notes expectations for the company’s growth to outperform competitors like Visa and Mastercard in what is anticipated to be a softer spending environment, which could further solidify its position in the market.
8. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 69
During Mad Money’s episode, Cramer discussed Abbott Laboratories’ (NYSE:ABT) ongoing litigation and the authorities’ evidence regarding the allegations that can potentially help the company and stock going forward.
“Abbott Labs is marred by litigation, too, this time for a specialty baby formula that plaintiffs claim causes grave harm or even death for their infants. But last week, the FDA, NIH, and CDC came out and they said they found no linkage, no conclusive evidence that Abbott’s formula causes the illness. Abbott lost the case not that long ago for a huge amount of money. It’s litigating another one now in the same venue.
I think it could lose that one, too. But the FDA, NIH, and CDC comments could potentially turn the tide in Abbott’s favor going forward, which would be worth a great deal to this $116 stock.”
Abbott Laboratories (NYSE:ABT) is engaged in discovering, developing, manufacturing, and selling healthcare products. In recent years, the company’s FreeStyle Libre franchise, which includes continuous glucose monitoring (CGM) systems, has emerged as a significant growth engine for the company.
The systems assist individuals with diabetes in effectively tracking their blood glucose levels. The company is heavily invested in innovation, which is evident in its recent introduction of new CGM options, including the Libre Rio, designed for over-the-counter use, and the Lingo system, which targets individuals who wish to monitor their glucose levels for non-diabetic health purposes.
Sales of the FreeStyle Libre products have been exceptional, contributing to Abbott Laboratories’ (NYSE:ABT) overall revenue growth. In the second quarter, the FreeStyle Libre segment reported sales of $1.6 billion, which is an impressive organic growth rate of 20.4% compared to the same quarter in the previous year.
The company has established itself as the leader in the CGM market, providing solutions to approximately 6 million patients worldwide. Management has expressed ambitions to expand the CGM portfolio significantly, with plans to achieve annual sales of $10 billion by 2028 through the introduction of Lingo and Libre Rio.
7. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holders: 72
Cramer thinks that the company has a few problems but they are in the past. Talking about The Charles Schwab Corporation (NYSE:SCHW), he remarked:
“Schwab’s one of the largest retail brokerages in the country, but its last few quarters have been greeted quite poorly. Bond portfolio issues… issues involving cash sweeps. I think these problems are past tense, and this situation is compelling, but I feel very lonely. Maybe this is the quarter where people will finally look at the future and how fabulous Schwab’s franchise really is. I can’t be sure, but they should.”
Charles Schwab (NYSE:SCHW) is a financial services provider, offering various solutions that include wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. As of August 31, 2024, the company reported 35.9 million active brokerage accounts, along with 5.4 million workplace plan participant accounts and 1.9 million banking accounts. The total client assets under management reached an impressive $9.74 trillion.
In September, Charles Schwab (NYSE:SCHW) shared a business update that outlined that its third-quarter performance is progressing in line with expectations, highlighting strong net new asset growth. In August alone, it reported net new asset growth of $32.8 billion, representing an increase of $4.9 billion compared to August of the previous year. The growth occurred amid expected client attrition in advance of a major client conversion weekend, which marks one of the busiest transition periods for the company throughout the year.
Additionally, the company noted a decrease in transactional sweep cash, with client funds awaiting investment declining from $371.8 billion in July to $366.8 billion in August. It was a significant improvement over the figures recorded in August of both 2023 and 2022.
6. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 80
Johnson & Johnson (NYSE:JNJ) has been in hot water with lawsuits for a while now. Cramer discussed its talc-related losses and the pre-packaged bankruptcy. He explained:
“Johnson & Johnson caught a huge break in its talc losses this week. A federal judge has allowed a pre-packaged bankruptcy plan to contain the damages, and it’s being held in Texas, much more friendly than New Jersey, where a lot of people felt it might be. Is it the beginning of the end of J&J’s multi-year legal overhang? Could be. That means we can finally start focusing on earnings again. And when we get those earnings, especially for the pharma business, I actually think we’re going to like what we see.”
Johnson & Johnson (NYSE:JNJ) operates as a comprehensive healthcare company, engaging in the research, development, manufacturing, and sale of a diverse range of healthcare products. The company has been navigating significant legal challenges, facing lawsuits from over 62,000 claimants who allege that its talc products, including baby powder, were contaminated with asbestos and linked to ovarian cancer and other health issues.
In response to these claims, a subsidiary known as Red River Talc sought bankruptcy protection in a federal court in Houston, as part of a broader strategy to manage these legal liabilities. The company has consistently maintained that its products are safe and free from harmful contaminants. The healthcare giant is pursuing a proposed settlement of approximately $10 billion aimed at resolving these lawsuits.
However, this approach has met with resistance, as opponents of the settlement plan intend to challenge the bankruptcy proceedings, potentially seeking to have the case moved to New Jersey. This situation arises from the so-called “Texas two-step” strategy employed by the company, which involves transferring liabilities to a newly formed subsidiary that then files for Chapter 11 bankruptcy. It aims to consolidate all claims into a single settlement without necessitating that the company itself declare bankruptcy.
Despite these legal hurdles, Johnson & Johnson (NYSE:JNJ) concluded the latest quarter with a healthy cash position of $26 billion, indicating the company’s ability to address claims while maintaining liquidity for dividends and other financial commitments. Net sales for the second quarter reached $22.4 billion, which is a year-over-year increase of 4.3%. The company’s profits totaled $4.7 billion, driven by its portfolio of high-demand medical devices and pharmaceuticals that cater to critical healthcare needs.
5. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 85
While Cramer does not share the enthusiasm around Citigroup Inc. (NYSE:C), he mentioned that CEO Jane Fraser has been leading the company rather well.
“The Street’s fallen in love with the stock of Citi. Rather amazing under the leadership of Jane Fraser. Sometimes I think she could say anything and the analysts would praise her. She’s turning Citi around. Not an easy task. Hard to remember the last time I saw so much confidence in this institution. I don’t share it yet because I like so many of the other banks.”
Citigroup (NYSE:C) is a leading global financial services company that provides an extensive range of financial products and services. It includes cash management, trading, investment banking, retail banking, and wealth management. On October 10, the company made significant advancements in its service offerings with the announcement that Citi Token Services for Cash transitioned from a pilot phase to a fully operational solution. It allows the facilitation of multimillion-dollar transactions for institutional clients, marking a key step in the company’s effort to deliver next-generation transaction banking services.
Moreover, Citi Token Services for Trade also reached an important benchmark by successfully executing pilot transactions with shipping agents CB Fenton and GAC Panama Shipping. In the second quarter, Citigroup (NYSE:C) reported revenues of $20.1 billion, a 4% increase compared to the previous year. This growth was widespread across various business segments, particularly in Banking, US Personal Banking, and Markets. The revenue growth included an approximate $400 million gain from the completion of the Visa B exchange during the quarter.
Additionally, the company’s net income reached $3.2 billion for the same period, up from $2.9 billion a year earlier. This rise in net income was supported by increased revenues and reduced expenses. By the end of the quarter, its deposits stood at about $1.3 trillion, which points to a solid foundation of client trust and engagement.
4. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 92
Cramer talked about Warren Buffett’s move to sell Bank of America Corporation (NYSE:BAC) shares and how it can be helpful. Here’s what he said:
“Bank of America caught a big break today. Warren Buffett has sold so much Bank of America stock now that he’s under 10%, where he no longer has to report every time he sells stock. Well, that’ll help the stock immensely. Why? Because it wears you down to see that Warren Buffett sold some shares every few days. You never want to be on the other side of a Buffett trade, right? That said, Bank of America might have borrowed some of the upside today for next week because it was up 5%.”
Bank of America (NYSE:BAC) is a well-known financial institution that provides various banking and financial services to individual consumers, businesses, institutional investors, and government institutions across the globe. It offers essential products such as savings and checking accounts, various loan options, investment management services, and wealth management solutions.
In the second-quarter earnings report, Bank of America (NYSE:BAC) presented mixed results. Revenue remained relatively stable, with a slight increase of 1% to reach $25.4 billion. However, net interest income declined by 3% to $13.7 billion, and EPS dropped from $0.88 to $0.83. Despite these challenges, the company experienced growth in its lending activities, with loans rising modestly from the previous year to $1.05 billion. Average deposits also saw an increase of 2%, totaling $1.91 billion, indicating a strengthening balance sheet.
During the second-quarter earnings call, management highlighted that approximately $10 billion in securities mature each quarter, presenting an opportunity for reinvestment at rates 300 basis points higher.
3. Netflix, Inc. (NASDAQ:NFLX)
Number of Hedge Fund Holders: 103
Cramer has been bullish on Netflix, Inc. (NASDAQ:NFLX) for some time. During Friday’s episode, he posited his opinion that the company will report good news.
“We get results from Netflix and the Street’s been all over the place on this one. I think it’ll be good, thanks to the new ad tier. And they’re about to release Squid Game 2. I’m told it’s going to be a guaranteed worldwide blockbuster, could bring in new subscribers from around the globe.”
Jim Cramer recently voiced his disagreement with Barclays’ pessimistic view that Netflix (NASDAQ:NFLX) would struggle to meet its revenue estimates. Cramer pointed out that the growth of the company’s advertising business, combined with new revenue streams from paid sharing plans, has provided the company with greater flexibility in achieving its revenue goals. He noted that starting next year, the streaming giant will no longer report quarterly subscriber figures, allowing a shift in focus solely to revenue expectations, which he believes is the crucial new metric.
Cramer also highlighted Piper Sandler’s position that even if Netflix (NASDAQ:NFLX) cannot maintain the same margin expansions as in the past year, it can still achieve steady growth. He expressed agreement with this perspective, suggesting that it shows a realistic approach to the company’s potential.
What truly matters, according to Cramer, is whether the company meets its financial targets. If the company continues to outperform earnings expectations, as it has done in 10 of the last 12 quarters, then concerns about its valuation become less relevant, as the stock price will appear more attractive in hindsight. Conversely, if it fails to deliver on its numbers, there would be little justification for a high stock price, which could lead to a decline.
Cramer believes the company deserves the benefit of the doubt, which is why he maintains a bullish stance on the stock. He remarked that the bear thesis seems overly speculative and not firmly grounded in current realities. It should be noted that this year, the company reached a significant milestone by exceeding 40 million members in its ad-supported tier. The company announced a 17% increase in revenue for the second quarter, along with a 17% growth in its paid streaming memberships from the prior year, which have now reached a total of 278 million.
2. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 114
Cramer talked about UnitedHealth Group Incorporated (NYSE:UNH) during Mad Money and highlighted that the company beats earnings routinely. Here’s what he had to say:
“We have United Health Group, and this Dow component just doesn’t miss. UNH is the only health insurer that regularly beats earnings. Nothing’s clockwork in this business. But when this one misses, the stock barely goes down, and when it beats, the gains are huge. Interesting risk-reward, huh?”
UnitedHealth Group (NYSE:UNH) operates as a diversified healthcare organization and offers a range of services and products. Through its UnitedHealthcare segment, the company delivers health insurance and benefits to millions of individuals in the United States, as well as to over 2 million people in South America. Meanwhile, the Optum segment offers healthcare and pharmacy services to more than 100 million individuals and provides technological support to hospitals and other healthcare providers.
UnitedHealth Group (NYSE:UNH) updated its earnings outlook for the full year of 2024, projecting net earnings in the range of $15.95 to $16.40 per share. The adjustment accounts for the reclassification of its remaining South American operations as held for sale, as well as the anticipated impacts of the cyberattack on Change Healthcare. The company completed the sale of its larger Brazilian operations during the first quarter of 2024, marking a significant transition in its South American presence.
In a move to strengthen its portfolio, the company acquired the home-health business LHC Group last year and is in the process of finalizing the acquisition of Amedisys, which also focuses on home health services. The expansion into home health shows that the company is looking to expand its service offerings. The company expects that its earnings could grow at a rate of 13% to 16% annually over the long term. Continued acquisitions and the expansion of its Medicare business are expected to contribute significantly to the company’s sustained financial growth.
1. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) will conduct its third-quarter earnings conference on October 17 and Cramer said that he will be tuned in to listen to the call.
“Thursday, Taiwan Semi reports. What can I say? This is the company that manufactures NVIDIA’s chips. The stock’s been very, very strong, really ramped today. Call’s basically in the middle of the night because the times are different. Don’t worry. I’m going to set the alarm and I’m going to listen. No, forget the alarm. I just won’t go to sleep after the close.”
Taiwan Semiconductor (NYSE:TSM) is a leading player in the semiconductor industry, engaged in the manufacturing, packaging, testing, and sale of integrated circuits and various semiconductor devices. The company has outlined ambitious growth expectations, projecting a compound annual growth rate for revenue between 15% and 20% over the coming years. Additionally, it has forecasted maintaining a long-term gross margin of 53% or higher, alongside a return on equity (ROE) of 25% or more throughout economic cycles.
In the second quarter, Taiwan Semiconductor (NYSE:TSM) reported consolidated revenue amounting to NT$673.51 billion (1 NT = $0.031), with a net income of NT$247.85 billion. Compared to the previous year, revenue for this quarter saw a remarkable increase of 40.1%, while net income rose by 36.3%.
The company’s client base includes prominent names that highlight its significance in the AI chip sector across various industries. NVIDIA, a leader in this market, utilizes the company’s process nodes to produce chips that offer superior performance and energy efficiency compared to competitors. Moreover, partnerships with Apple enable the company to expand its reach in the smartphone arena.
While we acknowledge the potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure. None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
