TSMC Stock Shows Strong Momentum and Growth Potential Amid Positive Technical and Fundamental Signals

Technical Analysis

Taiwan Semiconductor Manufacturing Company Limited (TSM) closed at $212.46 on June 10, 2025, up 2.64% following a robust trading session supported by strong volume of 13.43 million shares, slightly below its 15.64 million average. The price range during the day was tight between $209.97 and $213.23, reflecting firm intraday support near recent lows. The stock remains above both key moving averages: the 50-day at $175.58 and the 200-day at $186.33, signaling a sustained uptrend. The Relative Strength Index (RSI) stands at 73, indicating overbought conditions in the near term, which could prompt some profit-taking or consolidation. The MACD remains strongly positive at 8.89, confirming upward momentum. Average True Range (ATR) at around $2.39 suggests moderate volatility. A stop-loss level near $204.94 provides technical risk management guidance. No immediate resistance level is indicated, though the near-term consensus price target stands firm at $215.

For the next trading day (June 11, 2025), mild retracement or consolidation is possible given the elevated RSI, but the underlying technical momentum suggests continuation of the bullish trend with a probable test of the $215 target. Over the coming week, assuming no adverse news, the stock is expected to maintain support above $204, potentially pushing toward the yearly high of $226.40 as bullish sentiment remains intact.

Fundamental Analysis

TSMC’s market capitalization is approximately $1.10 trillion, positioning it as one of the largest players in the semiconductor industry. The trailing twelve months (TTM) earnings per share (EPS) stand at $8.32 with a price-to-earnings (P/E) ratio of 25.54. Relative to the semiconductor sector and the broader market, this P/E indicates moderate valuation reflecting solid growth expectations but without extreme overvaluation. The company pays a dividend yielding 0.92% on a TTM basis, supporting income appeal albeit modest.

Recent reports highlight a substantial 40% surge in May sales revenue, driven largely by accelerating demand for AI-related chips and contract manufacturing services, which underpin the share price’s strong momentum. This surge bolsters near-term revenue visibility, confirming TSM’s market leadership and operational strength. The next quarterly earnings announcement on July 17, 2025, will be pivotal to validate sustainability of this elevated growth trajectory.

Intrinsic value calculation based on normalized earnings and industry growth assumptions suggests fair value near current levels, with potential upside if growth sustains or accelerates. Given market expectations embedded in the ~$215 consensus target, the stock is fairly priced but retains upside potential contingent on execution and broader semiconductor market cycles.

Long-term investment potential remains attractive due to TSMC’s dominant technology position, high barriers to entry in advanced chip manufacturing, and expanding AI-driven demand. Structural trends in technology and automotive sectors reinforce durable growth, supporting a buy-and-hold thesis for patient investors seeking exposure to semiconductor industry leadership.

Overall Evaluation

TSM exhibits strong technical momentum coupled with robust fundamental performance, underpinned by recent revenue growth outperformance and healthy valuation metrics. Although near-term overbought conditions may cause short-term pullbacks, the structural growth drivers and industry leadership suggest continued appreciation potential.

Classifying the stock as a Buy candidate reflects a synthesis of bullish analyst consensus, solid earnings growth, and positive technical signals. Market participants should monitor the July earnings release and short-term volatility informed by RSI and volume patterns, but longer-term prospects align with sustained growth and intrinsic value expansion.