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Why TSMC Stock Tumbled Early Wednesday

July 16, 2025
12:51 PM
3 min read
AI Enhanced
stockstradingfinancialtechnologysemiconductorsmarket cyclesseasonal analysismarket

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Don't let the headlines spook you: TSMC stock is still priced perfectly.

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3 min read

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investment

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Published

July 16, 2025

12:51 PM

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The Motley Fool

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stockstradingfinancialtechnologysemiconductorsmarket cyclesseasonal analysismarket

From an analytical perspective, Don't let the headlines spook you: TSMC stock is still priced perfectly

Dutch semiconductor equipment manufacturer ASML (ASML -8. 41%) warned investors Wednesday its sales might not grow at all in 2026, sparking worries the artificial intelligence (AI) revolution might not be as inevitable as investors thought -- and sparking a brief sell-off in s of contract chip manufacturer Taiwan Semiconductor Manufacturing (TSM 0, given the current landscape

S of TSMC tumbled more than 4% in early trading before making up most of their losses by noon ET

ET, TSMC stock is down only 0

On the other hand, Image source: Getty Images

Semiconductor logic Why is it down at all

The reasoning goes this: The AI revolution is supposed to be great news for semiconductor stocks -- for both sellers of chips TSMC, and sellers of the machines that make the chips, ASML, in light of current trends

But if ASML's sales are slowing (and they are -- Q2 sales were up only 0. 6% year over year), then that logically might mean that TSMC's own sales growth could stall as well, given the current landscape

That's the worry that fretted investors this morning

On the other hand, Is TSMC stock a sell

Nevertheless, However, And yet, that's not what most analysts think will happen -- at all

Nevertheless, According to analysts polled by S&P Global Market Intelligence, total sales growth for TSMC over the next five years should average nearly 20% annually

And between the stock's 22, in today's financial world

Furthermore, 4-times earnings valuation and its 1, in today's financial world. 8% dividend yield, that means TSMC is almost perfectly priced for the long-term growth that almost everyone is certain will happen

Granted, short term hiccups could arise (which is quite significant)

At the same time, In ASML's case, growth is bably slowing, at least in part because of sanctions placed on exports of chip-making machinery to China

Moreover, But there are plenty of other countries in the world that need chips, and both ASML and TSMC can still sell to them

Long term, I expect TSMC stock is going to do just fine

Moreover, Rich Smith has no position in any of the stocks mentioned (noteworthy indeed)

The Motley Fool has positions in and recommends ASML and Taiwan Semiconductor Manufacturing

The Motley Fool has a disclosure policy (quite telling).