Nvidia is now a $1T company

I would think that selling (or choosing not to buy) a stock because their P/E is low because their CapEx is high is short-sighted unless you don't think their CapEx spending is going to pay off.

It's like...back in 2012, I was talking to one of my wife's relatives at a Christmas party. He said he'd never buy Amazon stock because they've never been profitable. I said they're not profitable because every dollar they make, they put back into R&D. He would have 10x his money now if he had bought their stock.

We're in an AI bubble. AI has a lot of incredible uses, but eventually the bubble will burst and the market will recognize places where AI doesn't really belong.

On the real front, the tech war with China is intensifying a bit. China doesn't want to be locked out of chipmaking and the US is doing that via ASML. When a company is having profits, one needs to ask whether those profits will continue and for how long. Will China invade Taiwan this year? Unlikely. However, there certainly is a risk now and in the future depending on how things go with US/China relations.

Likewise, TSMC's rise has come during an era when they've out-fab'd everyone else. However, if you go back to 2013, that wasn't really the case. Samsung, GloFlo, SMIC, and Intel arguably had slight leads. It's really been the past 5-7 years that TSMC has really taken off. This could change. Intel's roadmap over the next few years possibly looks better than TSMC's with their 20A process supposedly coming to market before TSMC's 2nm. With Intel also offering to fab chips for others, that could potentially steal some business from TSMC.

Are these likely to happen? I don't know. It could just be market pessimism. Still, there are real risks. TSMC started taking off when Apple decided to commit to using them as their only fab. Apple is known to make long-term commitments to companies so that they can invest with confidence. If Apple makes a new long-term deal with Intel in 2024 so that they can get 20A instead of waiting until 2025 for TSMC's 2nm, will that rob TSMC of their strategic planning advantage? Other fabs didn't have the commitments that Apple brings to the table. If TSMC loses that, how much does that impact their progress? It's easy to invest in the latest stuff when you have commitments. It's harder to go with "if you build it, they will come." TSMC has done a great job, but I have to think part of that is aided by Apple's commitments.

At the same time, TSMC's growth has come during a period when Intel was asleep at the wheel. It looks like that period is ending and Intel is rejuvenated toward their fab business. Even if Intel doesn't surpass TSMC, Intel being equal or barely behind will make for a very different market. We know that Qualcomm and AMD want to replace TSMC. They tried with Samsung and were disappointed at the yields. Maybe Intel will become an alternative (at least for Qualcomm). As Intel's fab gets better, it might dampen demand for ARM server chips and AMD chips in general. AMD has been doing well in part because it had a significant fab advantage via TSMC. If that goes away, AMD processors might go back to being second-string. Likewise, a decent amount of ARM datacenter demand is due to the cost and performance/watt advantage that comes from being able to use TSMC's better fab. If that goes away, do we see ARM datacenter adoption slow?

A lot of people treat TSMC as if their market position is unassailable. I don't think TSMC is going anywhere. I think they're in a decent position. However, if Intel actually pulls off their roadmap, it seems like things could be a bit rough. We already saw Apple forego TSMC's 4nm chips for their non-Pro iPhones last year. We've heard rumors of supply constraints on 3nm parts for this year's iPhone and we still haven't seen a 3nm MacBook. Intel was just at Computex showing off its Meteor Lake processor using Intel 4. When Apple launched their 5nm M1 MacBooks, Intel was making the transition from 14nm to 10nm.

Again, I don't want to make this sound too doom and gloom about TSMC. I just want to note that TSMC has significant risk and that risk has been increasing - both from competitors in the industry shifting and from the shifting political climate and rivalry between the US and China. Will those things come to pass? Who knows. Intel might start slipping on its roadmap like it did for years. China might decide that it's fine with the US cutting them off from EUV/ASML and that it has better things to do. But there is risk.