Buy This, Not That: Intel’s Pain Is This Stock’s Gain

Shah Gilani|February 19, 2025

Vultures have begun to circle Intel.

I remember a time when the semiconductor giant was the industry standard.

Now, it’s a ghost of its former self.

In an industry that sees double and even triple-digit revenue growth, Intel’s sales are down 32.8% since 2021.

In this week’s Buy This, Not That, we take a look at Intel’s potential suitors: Broadcom (AVGO) and Taiwan Semiconductor (TSM).

The former wants Intel’s products business… while the latter would love to get their hands on the foundries.

Only one of these two stocks deserves your money.

Write down which stock you think it is and then click on the thumbnail below to watch the video.

TRANSCRIPT

Hey everybody. Shah Gilani here with your weekly BTNT, as in Buy This Not That.

We got some interesting news yesterday.

It looks like both Broadcom (AVGO) and Taiwan Semiconductor (TSM) are interested in taking apart Intel.

In Taiwan Semiconductor’s case, taking over the foundry business – the manufacturing facilities and plants that Intel has that they are building —while Broadcom wants to take over the chips business itself.

Wow!

Now, Intel popped on the news.

Broadcom, not so much. Taiwan Semiconductor, not so much. Both of them were down a little bit yesterday on that news.

Now, this is unconfirmed news. And there’s a long way to go if anything happens.

So, people are asking already, well, should they buy Broadcom? Should they buy Taiwan Semiconductor?

And so, today, it’s going to be Buy This Not That, and all about Taiwan Semiconductor versus Broadcom.

So, the charts, well, there’s not a whole lot going on with the charts. Neither of them is compelling in terms of what their charts look like.

So, I’m going to pull up their charts just so you know exactly what I’m talking about. Because at this point, they’re just frankly unimpressive.

In spite of the fact that the market has done very well, they’ve all had good moves. Everything’s related to chips, related to the market, related to anything that’s AI, has had a good move.

And both of these two have had good moves.

Broadcom’s been a little spotty while Taiwan Semiconductor is steady as she goes.

Unexciting. But, nonetheless, a beautiful chart. So let’s have a look. First of all, here’s the market. The S&P 500.

Oh, how about that? Another record day on Wall Street yesterday.

TSM is Taiwan Semiconductor’s symbol. That is the ADR you can buy on the exchanges here (in the U.S.)

You know, it’s a beautiful move up here. It looks like it’s kind of gotten a little flat here.

So, is Taiwan Semiconductor a buy? The answer is to me, yes it is a buy.

Because, first of all, want to build factories here in the U.S. And President Donald Trump’s is going to force them to build factories here.

But I don’t think that this administration is going to want Taiwan Semiconductor to buy the foundries from Intel.

I don’t think they want to give that capacity to a foreign company even if they are manufacturing, even if the foundries are located here and they’re built here.

Besides, Intel has gotten a lot of money from the Chips Act. And it’s probably going to get more in my opinion.

So, I don’t know that this is going to work.

Taiwan Semiconductor – you should already own it. But to buy it on this news, no. It doesn’t make sense to me.

Now Broadcom, on the other hand, looks like it makes sense. Right?

Here’s Broadcom.

Kinda sloppy. Beautiful move here. Oh, chips, everything. Oh my gosh. Broadcom just hitting it out of the park.

So unimpressive as far as things go in my book here. But, yes, this had a move up, and it’s big move up here off its flatline.

This is a little worrisome. But yesterday, you see, it was down.

Now, you would think that Broadcom would be the better choice between Taiwan Semiconductor and Broadcom because they’re about making the chips themselves, not about the manufacturer, the foundries.

So, Broadcom looks to be the better buy…but it’s not.

It’s not because if they were to pay Intel for their capacity and maybe even get some of that CHIPS Act money to help them, that’s a tremendous burden.

And the thing that I don’t like about Broadcom is, yes, they pay a dividend. But they’re borrowing to pay the dividend.

Broadcom’s net income available to common shareholders is $6.17 billion. Okay? Good number.

Except they pay a dividend, and they paid a dividend out of that pool of money.

The dividend on a trailing basis cost them over $10 billion. Okay?

There’s a lot of shares outstanding, as far as Broadcom, 4.7 billion shares outstanding times $2.17, which is what the dividend cost them. Their payout ratio is 163%.

In other words, they’re using all the money from the net income available to common shareholders to pay dividends. And then they have to borrow to make a dividend.

So, I think they’re going to have to cut the dividend. So, it’s not a buy, because if they cut the dividend, you see this space down here? Broadcom’s going come right back down.

So, for me, Broadcom, no. It’s too risky here to buy on the news that maybe they’re going end up with Intel…the parts of Intel that they want.

First of all, they’re going to have to pay for it. You have to borrow pay for that. Maybe they get Chips Act money. But, it’s not going be enough to pay for whatever they’re going to have to shell out for what they want from Intel. So, no. It’s not.

Back to TSM. You know what? Stick with the winner.

Buy TSM if you don’t already own it. Why? Because it’s just a go-to company. You know, they make the Nvidia’s chips. They make a lot of people’s chips. The the backorders are phenomenal.

The stock is probably an opportunity here. I’m not saying it can’t come a little lower if there’s news that maybe there’s further talks on this. Why? Because the cost to Taiwan Semiconductor would be extraordinary.

And, yes, they have the money to pay for it. And they can easily borrow. So, they could buy it, but I think investors are looking at this.

Do they really need it? And I don’t know that they do.

So, yes, buy this, not that, people. Buy Taiwan semiconductor. Don’t buy Broadcom here on this news. That’s your BTNT for this week.

Cheers, everybody.