TSMC Stock: Bearish Trends and Strong Fundamentals Signal 'Hold' Amid Upcoming Earnings

Technical Analysis

Taiwan Semiconductor Manufacturing Company (TSM) stock closed at $166 on March 31, 2025, marginally increasing by 0.45% from the previous close. The stock is currently trading below its 50-day and 200-day moving averages, which stand at $191.57 and $185.17 respectively, indicating a bearish trend. The Relative Strength Index (RSI) of 45 suggests the stock is in the neutral zone but leaning towards oversold territory. The MACD shows a negative divergence at -6.79, reflecting bearish momentum. Support is identified at $165.25, with resistance at $172.97, indicating a range-bound movement in the near term.

Short-term Prediction

For the next trading day, TSM may encounter resistance at the $172.97 level, while maintaining support around $165.25. A potential increase in volume, which currently stands well below the average, could catalyze a breakout or breakdown. Over the upcoming week, the upcoming dividend announcement on April 10, 2025, might influence short-term investor sentiment and slightly bolster the stock price. However, with the earnings announcement scheduled for April 17, 2025, traders may remain cautious.

Fundamental Analysis

TSMC's recent performance shows a robust increase, with 3nm and 5nm nodes driving significant revenue growth, underpinned by rising demand and advancing technology. The company's strategic $100 billion expansion plan in the U.S. aligns with its long-term vision to capitalize on increasing demand for cutting-edge semiconductors.

The stock's price-to-earnings (P/E) ratio is 24.68, reflecting a premium compared to industry norms, possibly due to strong growth projections and dominant market position. Revenue reached NT$553.3 billion in early FY25, indicating a 39.2% YoY rise.

Despite trading below recent highs, long-term growth catalysts, including a projected $2 trillion utilization of its next chip technology, support an optimistic view.

Long-term Investment Potential

Long-term prospects for TSM are bolstered by strategic expansion initiatives, leadership in advanced semiconductor nodes, and extensive market demand projections. As TSM continues to drive revenue from high-performance computing, the stock holds significant potential for long-term investors seeking exposure to the semiconductor space.

Overall Evaluation

Considering technical factors indicating a bearish trend and fundamental indicators demonstrating robust growth potential, TSM is categorized as a 'Hold'. Short-term traders might await a clearer trend direction post-earnings, while long-term investors may view the current price point as an opportunity to accumulate shares in anticipation of future growth. This analysis reflects the balance between prevailing technical weakness and foundational strengths seen in TSM’s operational advancements and market positioning.