TSMC Stock Crashes! Here’s What Smart Investors Are Doing

Chip manufacturer Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE: TSM) could have just handed investors a rare window of opportunity. 

After reaching 52-week highs of $226.40, TSM stock has tumbled over 33%, recently bottoming out around $141. The selloff, triggered by macro fears and tariff war tensions, has now carved out a compelling opportunity for long-term investors.

With its recent stock correction and a robust long-term outlook driven by AI and global expansion, this foundry giant is flashing a ‘Strong Buy’ signal for many investors. 

But should you invest in TSMC? Let’s break down this opportunity using the Invest Diva Diamond Analysis (IDDA) framework:

IDDA Point 1 & 2: Capital & Intentional

Before jumping into TSMC, assess how the company fits into your unique financial goals and risk tolerance.

• Make sure your portfolio aligns with your personal investment values, long-term and/or short-term vision.
• Consider how Microsoft’s aggressive AI investment and global expansion fits within your current strategy
• Are you able to handle some geopolitical risks associated with Taiwan and China?

IDDA Point 3: Fundamental Analysis

🔹TSMC’s Global Dominance and AI Strategic Expansion

• TSMC Dominates the global foundry market with a 67% market share as of Q4 2024.
• It is strategically expanding operations globally, backed by government subsidies.
• Positioned at the core of AI, data centers, and digital transformation—industries with decade-long secular tailwinds.
• Investing at least 100 billion in US chip manufacturing, announced by President Trump

🔹TSMC is growing stronger even amidst market turbulence.

• FQ1 2025 preliminary sales growth: +41.6% YoY
• FQ4 2024 growth: +38.8% YoY

IDDA Point 4: Sentimental Analysis

🔹Market sentiment has swung hard due to:

• Burst of the AI hype cycle in Feb 2025
• Intensified global tariff war, with steep import tariffs from China (145%), Germany (20%), and others
• Geopolitical risks mainly from China–Taiwan tensions, the U.S.–China tech war, and global supply chain disruptions, all of which could impact its operations and stock performance.

🔹But here’s what the market missed:

• The U.S. recently paused tariffs on smartphones, computers, and electronics, hinting that the worst might be behind us.
• AI adoption is still booming—Palantir and Salesforce are doubling down on Gen AI and federal contracts.
• Alphabet reaffirmed its $75B investment in data centers, despite the noise.

In short, pessimism has likely overshot reality. Simply put, people are probably more worried than they need to be.

IDDA Point 5: Technical Analysis

On the weekly chart, TSMC reached a new high of $225 on January 21 2025, but has since been in a clear downtrend. 

🔻Recently, the stock dropped as low as $135, testing the lower boundary of the Ichimoku Cloud, which has acted as a key support level, touching the 50% Fibonacci retracement level.

🟢 Notably, the second candlestick is a bullish engulfing pattern, suggesting a potential rebound.

🔻However, the bullish future cloud is thinning, indicating that upward momentum may be weakening. 

If the price breaks below the Ichimoku Cloud, further downside is likely. Conversely, if it holds above this level, we could see a meaningful rebound in the coming weeks.

Investors looking to get in can consider these buy limit levels

📌Current market price 157.33 (High Risk)

📌141.56 (Medium Risk)

📌121.60 (Low Risk – might not reach)

Here are the Invest Diva ‘Confidence Compass’ questions to ask yourself before buying at each level:

1. If I buy at this price and the price drops by another 50%, how would I feel? Would I panic, or would I buy more to dollar-cost average at lower prices?

2. If I don’t buy at this price and the market suddenly turns around and starts going up again, will I beat myself up for not having bought at this level?

Remember: Investing is personal, and what is right for me might not be right for you. Always do your own due diligence. You should ONLY invest based on your own risk tolerance and your timeframe for reaching your portfolio goals

Final Thoughts on TSMC

TSMC is the world’s biggest chip manufacturer, and even though its stock has dropped recently, the company is still strong and growing. It’s at the center of major trends like AI and data centers, which will keep driving demand for its products.

Right now, the stock is trading at a big discount compared to its usual value, giving investors a chance to buy it cheap. While short-term risks like trade tensions still exist, TSM’s long-term future looks bright.

If you’re building your portfolio and can handle some ups and downs, this could be a great opportunity to invest in a high-quality company at a good price.

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If you enjoyed my blog post about the ‘TSMC Stock Crashes! Here’s Why Smart Investors Are Buying the Dip Now’, you’ll love my post on ‘Microsoft In The Midst Of A Trade War: Should Investors Take Advantage Of The Dip?’

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