TSMC Shows Resilience and Positive Outlook Amid Volatility and Strong Analyst Support

Technical Analysis

Taiwan Semiconductor Manufacturing Company Limited (TSM) closed at $173.67 on September 30, 2024, down $4.30 (-2.42%) from the previous session. The stock has shown resilience around the $171.87 support level, with a 14-day Relative Strength Index (RSI) of 61 indicating that it is nearing overbought territory but not quite there. The current price is above its 50-day moving average of $167.54, suggesting a bullish trend in the short term. However, the stock is still below the 200-day moving average of $146.38, indicating a longer-term positive bias.

With an Average True Range (ATR) of 3.42, TSM has seen substantial volatility, which could lead to price swings in the coming days. The MACD of 1.41 also supports potential upward movement as it remains above zero. Resistance is identified at $184.50, and the stock could attempt to test this level in the near term if buying pressure increases.

Fundamental Analysis

TSMC's current market capitalization is approximately $812.44 billion, and the stock has a P/E ratio of 31.17 with earnings per share (EPS) at $5.52. The discounted cash flow (DCF) analysis provides an intrinsic value estimate of $69.83, suggesting the stock may be overvalued at its current trading level. Additionally, TSM's dividend yield stands at 0.28%, with the next dividend announcement anticipated on October 9, 2024.

Recent news indicates that TSMC does not expect any significant disruption to operations from Typhoon Krathon, potentially alleviating investor concerns about short-term operational risks. Furthermore, analysis by several experts indicates a consensus "Buy" rating, with target prices ranging from $125 to $210, and an average target of $183.75, suggesting upside potential over the coming weeks.

Prediction and Short-Term Performance

Given the stock's current technical indicators, supportive news, and analyst consensus, TSM is likely to remain resilient in the short term. The next trading day could see TSM test the $176 resistance level, while the upcoming week may allow the stock to challenge its year high of $193.47 if positive momentum is sustained.

Intrinsic Value and Long-Term Potential

In terms of intrinsic value, TSM's substantial DCF valuation indicates that the market is currently pricing the stock above its fundamental value. However, as a market leader in semiconductor manufacturing with strong growth potential, TSM could offer significant long-term investment value, provided it continues to capitalize on the expanding demand for chips across various sectors.

Overall Evaluation

Considering the combination of strong technical momentum, a supportive analyst outlook, and resilience against operational disruptions, TSM appears to be a "Buy" candidate. The stock's long-term prospects remain positive, bolstered by its wide moat in the semiconductor industry, although investors should be cautious of potential short-term volatility due to elevated market conditions.