Why TSMC Stock Tumbled Early Wednesday
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Don't let the headlines spook you: TSMC stock is still priced perfectly.
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July 16, 2025
12:51 PM
The Motley Fool
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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).
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