Tariff Exemptions Set the Stage for a Taiwan Semiconductor Rally

Key Points

• Taiwan Semiconductor stock might be in the clear after President Trump applied new tariff exemptions for consumer electronics and chips.
• Price action and sentiment show investors that this might be the case moving forward for the company.
• Double-digit upside in valuations is reiterated by further institutional buying.

It’s no secret that volatility has been the name of the game in the stock market over the past couple of weeks. President Trump’s announcement of new trade tariffs spooked investors, as uncertainty surrounding the future of economic activity and growth targets has become cloudy at best. However, even in the midst of all this fresh volatility, there are still opportunities to be found.

President Trump has applied an exemption on tariffs for products that are some of the most important for the global economic landscape, as almost all sectors and industries rely in one form or another on the technology sector.

Within that sector, semiconductors reign king, which is why these exemptions were made on chips made and exported from China to support consumer electronics and other companies.

Among all the names in this industry, there is one investor who needs to be watched right now, as it is the epicenter of everything that runs on a chip or most other types of technology.

That stock is Taiwan Semiconductor Manufacturing NYSE: TSM, which supports the manufacturing and supply chain of most of the consumer electronics companies that have now been exempted from tariffs.

Why Is Taiwan Semiconductor a Top Pick?

While most investors have focused on the more popular names in the market today, such as NVIDIA Co. NASDAQ: NVDA and even Apple Inc. NASDAQ: AAPL, one fundamental factor is true today and will remain true for the months and quarters to come. That factor is that all of these popular names rely on Taiwan Semiconductor as a main supplier.

Understanding how important this setup is today, investors can see how NVIDIA or Apple would not succeed without Taiwan Semiconductor. Therefore, exemptions were made to let this company operate more freely in today’s uncertain market.

Not only that, Taiwan Semiconductor has gained the favor of the United States government by now looking to invest a little over $165 billion to bring its manufacturing and logistics chain from the Asian regions into the United States, having started to build factories in states like Ohio and Arizona.

Of course, there are other names like Intel Co. NASDAQ: INTC that have done the same to remain compliant with the President’s goal to mitigate the risks of the semiconductor supply chain being too dependent on Asian regions. However, there is no positioning in market share terms that even compares to Taiwan Semiconductor's stock today.

Optimism Returns to Taiwan Semiconductor

There is one common behavior on Wall Street that investors should be aware of when they analyze the market. Whenever a stock or a sector has gone on a pretty bearish price action, analysts and buyers tend to stay away from that space until things start to look up again.

Therefore, any sudden shift in sentiment toward bullishness or optimism can—and should—be taken with more than just a grain of salt. That is the case today for Taiwan Semiconductor stock, as despite trading at 68% of its 52-week high, some analysts have recently come in to boost the future upside potential in the name.

Specifically, analysts from Needham & Company decided not only to reiterate their Buy rating on the stock as of April 2025 but also to place a new valuation on it as high as $225 per share. This new view would imply that the stock now needs to flirt with its 52-week high of $226 per share, where more momentum buyers could start to step in.

All told, the implications are for a rally of as much as 48.5% from today’s low price, giving investors an unlikely source of upside for their portfolios during one of the most volatile periods in stock market history. As it turns out, these analysts aren’t alone in their contrarian and bold views on Taiwan Semiconductor stock.

As of the new quarter (which began in April 2025), just over $1 billion of institutional capital made its way into Taiwan Semiconductor stock, as buyers realized what investors now know: Nobody can have an NVIDIA or Apple without Taiwan Semiconductor.

When that belief and awareness are spread out, it only makes sense to look at this leader at such a low price. Leading the way in this new buying were those from Dover Advisors, who boosted their holdings in Taiwan Semiconductor stock by 9.2% as of April 2025, netting their position at a high of $2.3 million today.