Taiwan Semiconductor Manufacturing (NYSE:TSM) Stock Falls 1.8% - Here's Why

Key Points

• TSMC shares fell 1.8% to $422.15 amid elevated trading volume, despite strong quarterly results and upbeat guidance.
• Fundamentals remain strong: third-quarter net income rose 68.7% year over year, while fourth-quarter revenue guidance exceeded consensus estimates; AI, high-performance computing, and advanced-node demand continue to drive growth.
• Analysts remain broadly bullish, with a consensus “Buy” rating and an average price target of $528.22, although TSMC’s latest quarterly dividend was reduced to $1.0854 per share from $1.1136.

Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM - Get Free Report)'s stock price dropped 1.8% on Thursday. The company traded as low as $407.13 and last traded at $422.15. 22,281,890 shares traded hands during mid-day trading, an increase of 70% from the average session volume of 13,080,546 shares. The stock had previously closed at $430.00.

Trending Headlines about Taiwan Semiconductor Manufacturing

Here are the key news stories impacting Taiwan Semiconductor Manufacturing this week:

• Positive Sentiment: Record earnings and stronger guidance support the growth outlook. TSMC reported third-quarter net income of approximately NT$763.1 billion, up 68.7% year over year, while revenue and earnings exceeded expectations. The company guided for fourth-quarter revenue of $52.3 billion to $54.3 billion, well above the roughly $48.8 billion consensus estimate. TSMC posts record profit for a sixth straight quarter
• Positive Sentiment: AI and advanced-node demand remains robust. High-performance computing and artificial intelligence drove growth, with advanced technologies accounting for about 79% of wafer revenue. Momentum is also building for TSMC’s 2-nanometer process, reinforcing its leadership in cutting-edge chip manufacturing. Taiwan Semiconductor Q3 earnings and revenues top estimates
• Positive Sentiment: Analyst confidence remains high. Needham raised its price target from $530 to $560 and maintained a Buy rating, citing the company’s long-term AI growth prospects. TSMC is also reportedly discussing potential production involvement in Elon Musk’s proposed Texas “Terafab” complex, which could expand its U.S. footprint. Why TSMC’s spending plan should not deter investors

Analyst Ratings Changes

Several research analysts have issued reports on TSM shares. TD Cowen increased their target price on shares of Taiwan Semiconductor Manufacturing from $400.00 to $440.00 and gave the stock a "hold" rating in a report on Friday, July 17th. Barclays boosted their price target on shares of Taiwan Semiconductor Manufacturing from $650.00 to $665.00 and gave the company an "overweight" rating in a report on Tuesday, October 6th. Stifel Nicolaus started coverage on shares of Taiwan Semiconductor Manufacturing in a research report on Tuesday, September 1st. They issued a "buy" rating and a $515.00 price target for the company. Bank of America increased their price objective on shares of Taiwan Semiconductor Manufacturing from $490.00 to $590.00 and gave the company a "buy" rating in a research note on Wednesday, June 24th. Finally, Sanford C. Bernstein increased their price objective on shares of Taiwan Semiconductor Manufacturing from $430.00 to $554.00 and gave the company an "outperform" rating in a research note on Tuesday, August 11th. Three research analysts have rated the stock with a Strong Buy rating, eleven have issued a Buy rating and two have issued a Hold rating to the stock. According to MarketBeat, the stock presently has a consensus rating of "Buy" and an average price target of $528.22.

Taiwan Semiconductor Manufacturing Price Performance

The firm has a market capitalization of $2.19 trillion, a P/E ratio of 30.46, a P/E/G ratio of 0.92 and a beta of 1.37. The company has a debt-to-equity ratio of 0.14, a current ratio of 2.46 and a quick ratio of 2.25. The stock's fifty day simple moving average is $434.77 and its 200 day simple moving average is $416.47.

Taiwan Semiconductor Manufacturing (NYSE:TSM - Get Free Report) last issued its quarterly earnings data on Tuesday, September 8th. The semiconductor company reported $4.62 earnings per share (EPS) for the quarter. The firm had revenue of $46.87 billion for the quarter. Taiwan Semiconductor Manufacturing had a net margin of 50.31% and a return on equity of 39.25%. On average, equities research analysts predict that Taiwan Semiconductor Manufacturing Company Ltd. will post 16.60 EPS for the current year.

Taiwan Semiconductor Manufacturing Cuts Dividend

The firm also recently disclosed a quarterly dividend, which will be paid on Thursday, January 7th. Stockholders of record on Thursday, December 10th will be issued a dividend of $1.0854 per share. The ex-dividend date is Thursday, December 10th. This represents a $4.34 annualized dividend and a dividend yield of 1.0%. This is a drop from Taiwan Semiconductor Manufacturing's previous quarterly dividend of $1.1136. Taiwan Semiconductor Manufacturing's dividend payout ratio (DPR) is currently 24.75%.

Insider Transactions at Taiwan Semiconductor Manufacturing

In other Taiwan Semiconductor Manufacturing news, VP Bor-Zen Tien acquired 1,000 shares of the stock in a transaction dated Monday, August 3rd. The stock was purchased at an average price of $73.06 per share, with a total value of $73,060.00. Following the transaction, the vice president directly owned 14,051 shares of the company's stock, valued at $1,026,566.06. This trade represents a 7.66% increase in their ownership of the stock. The acquisition was disclosed in a legal filing with the SEC, which can be accessed through this hyperlink. Also, VP Lipen Yuan bought 350 shares of Taiwan Semiconductor Manufacturing stock in a transaction that occurred on Tuesday, August 18th. The shares were acquired at an average cost of $73.58 per share, for a total transaction of $25,753.00. Following the completion of the transaction, the vice president directly owned 2,000 shares in the company, valued at $147,160. This represents a 21.21% increase in their ownership of the stock. Additional details regarding this purchase are available in the official SEC disclosure. Insiders acquired 16,043 shares of company stock valued at $1,185,746 in the last quarter. 1.11% of the stock is currently owned by corporate insiders.

Hedge Funds Weigh In On Taiwan Semiconductor Manufacturing

Several hedge funds and other institutional investors have recently modified their holdings of TSM. Evolution Wealth Management Inc. boosted its holdings in shares of Taiwan Semiconductor Manufacturing by 257.7% during the 1st quarter. Evolution Wealth Management Inc. now owns 93 shares of the semiconductor company's stock worth $31,000 after purchasing an additional 67 shares during the last quarter. Cedar Mountain Advisors LLC increased its holdings in shares of Taiwan Semiconductor Manufacturing by 88.2% in the second quarter. Cedar Mountain Advisors LLC now owns 64 shares of the semiconductor company's stock valued at $31,000 after purchasing an additional 30 shares during the last quarter. Financial Freedom LLC acquired a new stake in shares of Taiwan Semiconductor Manufacturing in the first quarter valued at approximately $32,000. Markowski Investments purchased a new position in Taiwan Semiconductor Manufacturing during the second quarter worth approximately $33,000. Finally, Lam Group Inc. purchased a new position in Taiwan Semiconductor Manufacturing during the first quarter worth approximately $34,000. 16.51% of the stock is owned by hedge funds and other institutional investors.

About Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing Company Limited NYSE: TSM, commonly known as TSMC, is a Taiwan-based semiconductor manufacturer and the world's largest dedicated semiconductor foundry. Founded in 1987 by Morris Chang, the company pioneered the pure-play foundry model, producing chips designed by other companies rather than selling products under its own semiconductor brand.

TSMC manufactures a broad range of integrated circuits, including advanced logic chips used in high-performance computing, smartphones, automotive systems, communications equipment, and consumer electronics.

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