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Bernstein is out today with its take on two important developments in the semi sphere: NVIDIA's ongoing rout which has now primed the stock for dip-buying, and TSMC's mammoth investment pledge for the US.
First, on the ongoing weakness in NVIDIA shares, Bernstein analyst Mark Li notes that the stock has been "battered by a storm of growth fears, supply chain noise, and tariff and regulatory risks." In fact, NVIDIA shares are now underperforming their peers as well as the market, with the SOX index down 8 percent so far this year and the S&P 500 index down just 1 percent vs. the ~15 percent year-to-date losses for NVIDIA.
Li goes on to note:
"After yesterday’s rout the stock trades at ~25x NTM earnings, their weakest level in a year and close to 10 year lows. In fact, the stock now trades BELOW parity relative to the SOX (something we have seen only once or twice in the past decade)."
Li thinks that worries over the supposed longevity of the AI trade feel "premature," especially as the hyperscalers continue to increase their CapEx projections, "a product cycle is just kicking off, and we have GTC coming in a few weeks."
Finally, Li states that investors who've bought NVIDIA shares when they were trading at 25x NTM earnings have historically done well, managing to earn an average return of 150 percent over the next year.
Next, Bernstein's Mark Li pivots towards TSMC's pledge to spend an additional $100 billion in the US on top of its earlier spending pledge of $65 billion. The latest investments will go toward the construction of 3 fabs in the US, along with 2 advanced packaging centers, and a major R&D facility, constituting the largest single foreign investment in the history of the US.
Li thinks that this investment bonanza would allow TSMC to keep Intel at an "arm's length." Bear in mind that the Taiwanese chip contract manufacturer has been under increasing pressure from the Trump administration to support Intel by transferring its technology and/or operating Intel's fabs under a JV model.
Of course, this mammoth investment commitment will increase cost pressures for TSMC, albeit tempered by the $6.6 billion CHIPS Act subsidy, which is less likely to get cut now, and greater flexibility on the construction timeline, allowing TSMC to pace its investments "and offset the cost burden with price premium & cost reduction elsewhere."
Finally, on the packaging front, Li notes that "Amkor has promised to build CoWoS capacity in the US, but not being able to do CoWoS-L & hybrid bonding makes it unable to meet" the needs of NVIDIA and AMD. Consequently, TSMC's undertaking to build 2 advanced packaging facilities in the US would resolve this emerging bottleneck.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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