Key Takeaways
- TSMC fell 10% today, and UMC fell harder, as Democrats’ bigger-than-expected midterm wins fed fears of a slower AI build-out.
- UMC reported October revenue up 18.3% this morning and sank anyway.
- Analysts expect TSMC’s EPS to nearly triple from 2025 to 2028.
- TSMC’s October sales, due next week, are the first read on its fourth-quarter guide.
Taiwan Semiconductor Manufacturing (TSM) fell 10% today as the chip rout hit a second day. A Taiwan neighbor fell harder: United Microelectronics (UMC) dropped 16%.
TSMC had no news of its own. Democrats’ larger-than-expected midterm wins raised fears of a slower AI build-out. Then Qualcomm, a TSMC customer, warned on memory costs after Wednesday’s close, and Bloomberg reported this morning that Micron had paused a $4.5 billion Taiwan plant. Lam Research (LRCX), which gets 18% of its revenue from customers in Taiwan, fell 10%.
Good news didn’t help
UMC reported this morning that October revenue rose 18.3% from a year earlier to NT$25.2 billion, faster than its 16.3% for the year so far, yet the stock sank. Bloom Energy (BE) fell 17% despite announcing a 900 MW fuel cell deal with NTT DATA this morning.
Analysts still expect TSMC’s EPS to nearly triple from 2025 to 2028:
Chip packager ASE Technology (ASX) sank 19%, though its latest quarter looked just as healthy. Third-quarter revenue rose 44.8% from a year earlier to NT$244.2 billion, and gross margin in its packaging and testing business rose to 30.6% from 27.3% in the second quarter.
Cheaper than usual
TSMC traded at 16x forward earnings going into today, below its five-year average of 18x:
Today’s drop takes it to about 15x.
TIKR tracks 35 analysts on TSMC. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on TSMC, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See TSMC’s Analyst Ratings
October is the next test
TSMC’s revenue has risen every quarter since early 2025:
October’s sales, due next week, are the first read on its fourth-quarter guide of $52.3 billion to $54.3 billion.
Lam needs TSMC to keep spending. TSMC guides 2026 capex to $60 billion to $64 billion. Lam guided December-quarter revenue to $8.60 billion, up from $8.22 billion in the September quarter. Investors selling Lam today are betting on a spending cut TSMC hasn’t announced.
The way I see it, investors are selling TSMC on a political risk that hasn’t shown up in its numbers. At about 15x, I’d rather be buying.
Of course, if AI spending does slow, TSMC’s 2027 guidance in mid-January will be the first sign.
So what is TSMC stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
