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Taiwan Semiconductor Manufacturing (TSM) Shares Drop but Analysts See Buying Opportunity
Recently, shares of Taiwan Semiconductor Manufacturing (TSM) took a 6.72% hit amidst intense competition from Chinese AI rival DeepSeek. However, analysts are not panicking and instead see this dip as an attractive buying opportunity.
TSM’s strategic position in the AI supply chain has been a significant growth driver. The company produces nearly 90% of the world’s advanced chips, making it a crucial component for AI development. This relationship has proven highly profitable, with its high-performance computing segment – which includes AI chips – experiencing an impressive 58% year-over-year growth in the past quarter. This segment now accounts for 51% of TSM’s total revenue.
Despite current market challenges and geopolitical tensions, TSM management remains optimistic about the company’s prospects. They expect a mid-40% compound annual growth rate for AI accelerator revenue over the next few years, indicating that the stock could see significant upside in the coming months.
TSM has demonstrated impressive historical performance, with its share price increasing by more than 200% over the past five years. However, it has pulled back around 25% year-to-date due to market conditions and geo-political tensions. Hedge funds continue to display confidence in TSM, as they hold an impressive 186 positions at the end of Q4 2024.
The global economic environment remains uncertain, with the US economy anticipated to enter a period of continuous stagflation – characterized by persistent inflation, stagnant growth, and elevated unemployment. Amidst this backdrop, TSM’s dominant market position, essential role in AI development, and compelling growth prospects make it an attractive option for investors seeking exposure to the semiconductor industry.
The recent investment announcements and tariff developments will likely continue to influence TSM’s stock performance in the coming months as global trade tensions unfold.
Source: https://coincentral.com/taiwan-semiconductor-manufacturing-tsm-shares-drop-but-analysts-see-buying-opportunity/
