Samsung vs TSMC stock: Susquehanna analyst picks a side

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on May 29, 2023
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  • Mehdi Hosseini picks TSMC over Samsung for exposure to AI.
  • The Susquehanna analyst explained why in a recent CNBC interview.
  • TSMC stock is already up about 40% versus the start of the year.

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Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) is a better pick for exposure to artificial intelligence versus Samsung Electronics Co Ltd (KRX: 005930), says a Susquehanna analyst.

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TSMC stock could climb to $126

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Mehdi Hosseini recommends that investors buy TSMC shares as they have upside to $126 – more than a 20% upside from here.

If AI is becoming more of a buzzword, TSMC has most exposure there. The quality of earnings, quality of management, and shareholder return favour TSMC over Samsung . . . that’s way behind TSMC.

The semiconductor behemoth currently pays a dividend yield of well over 2.0% that makes up for an additional reason to own its stock.

The Susquehanna analyst remains bullish on TSMC shares even though the multinational reported a year-over-year decline in quarterly revenue last month.

Why is he not as bullish on Samsung stock?

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Mehdi Hosseini does not see tensions between the United States and China as a threat for TSMC as it’s the only game in town when it comes to manufacturing advanced microchips.

He likes the Taiwanese company over Samsung as it specializes on semiconductor manufacturing. In a recent interview with CNBC, the Susquehanna analyst noted:

Samsung has more exposure to memory industry, which is more volatile, compared to TSMC that has more leverage to leading edge in semiconductor manufacturing. So, TSMC offers better free cash flow margin.

At writing, TSMC shares are up roughly 40% for the year. In February, legendary investor Warren Buffett had cut his stake in Taiwan Semiconductor Manufacturing as Invezz reported here.

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