Shares of Taiwan Semiconductor Manufacturing (TSM, Financial) were falling today due to bearish momentum in the broader semiconductor sector. The stock was down 5.66%, indicating a broader market pullback.
Chip stocks, including Taiwan Semi, tend to follow the performance of Nvidia. Shares of Nvidia were tumbling today despite no major company-specific news. Investors appear to be questioning valuations in the sector after Nvidia's second-quarter report last week beat estimates, but by less than expected.
Taiwan Semi (TSM, Financial) is sensitive to broader demand for semiconductors and AI components. Any indication that demand for these new technologies might not meet expectations weighs on the stock. Additionally, tensions between Japan and China over chip export restrictions may be impacting investor sentiment. The U.S. has been pressuring Japan to restrict advanced chipmaking technology exports to China, and Beijing is threatening economic retaliation, including withholding rare earth metals needed for technology production.
Currently, Taiwan Semi's stock price stands at $161.98, reflecting a 5.66% drop. The company has a market capitalization of $840.04 billion and a P/E ratio of 28.97. Despite the recent downturn, TSM showcases strong fundamentals with a robust Altman Z-Score of 8.88 and a Beneish M-Score of -2.8, which indicates that the company is unlikely to be a manipulator.
Taiwan Semi boasts significant financial strength, evidenced by its comfortable interest coverage ratio of 90.07 and an expanding operating margin of 41.99%. Furthermore, its GF Value, estimated at $132.78, suggests that the stock might be modestly overvalued. For a detailed valuation analysis, you can refer to the GF Value page.
Despite the short-term volatility, TSM has shown impressive growth trajectories with a 3-year revenue growth rate of 17.3% and a 5-year cash flow growth rate of 13.2%. These metrics highlight the company's potential for long-term gains, reinforcing its position as a leader in the semiconductor industry.
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