Sign InTSMC Technical Analysis: Bullish Momentum Continues, Watch for Market Resistance
Summary
On June 17, 2024, Taiwan Semiconductor Manufacturing Company (TSMC) closed at $177.24, up by 2.74%, with bullish technical indicators and high investor interest pushing the stock to new yearly highs, despite it being significantly overvalued based on intrinsic value calculations, thereby labeling it a Hold for cautious investors.
Technical Analysis
Taiwan Semiconductor Manufacturing Company (TSMC) closed at $177.24 on June 17, 2024, reflecting a 2.74% increase. The stock reached a high of $178.67, marking its yearly peak, and a low of $173.48 during the trading session. Volume surged to 17.62 million shares, significantly higher than the average volume of 13.85 million, suggesting heightened investor interest.
Key technical indicators provide a bullish outlook. The 14-day Relative Strength Index (RSI) stands at 69, bordering the overbought territory. The 50-day moving average is $148.58, and the 200-day moving average is $117.71, indicating strong upward momentum. The Moving Average Convergence Divergence (MACD) of 5.29 suggests sustained positive momentum. The Average True Range (ATR) of 2.85 indicates moderate volatility.
TSMC currently shows no immediate resistance levels, further supporting potential upward movement. The stop-loss is calculated at $170.35, aiming to protect against downside risk. Support at $162.92 provides a safety net for investors observing technical signals.
Fundamental Analysis
Fundamentally, TSMC's market capitalization is $742.62 billion, emphasizing its status as a major player in the semiconductor industry. With an EPS of $5.21 and a P/E ratio of 34.02, the stock is trading at a significant premium, likely reflective of high growth expectations driven by its leadership in AI chip manufacturing.
Dividends are scheduled with a yield of 0.25%, payable on July 11, 2024. While the yield is modest, it indicates the company's stable dividend policy. Notably, the DCF valuation stands at $65.68, suggesting the stock is significantly overvalued according to intrinsic value calculations.
Analyst sentiment reveals a consensus rating of "Buy," with target prices ranging from $125 to $200. The median target is $168, slightly below the current trading price, reflecting a mixed outlook on immediate upside potential.
Relevant News
Recent news points to TSMC’s continued involvement in pivotal technological advancements, including AI chip manufacturing. Key updates announced on June 17, 2024, alongside TDK enhance the bullish sentiment in the tech sector. Articles from June 16, 2024, highlight TSMC's potential to join the ranks of companies with market caps exceeding $1 trillion, driven by AI-related growth.
Next Trading Day and Upcoming Week Prediction
For the next trading day, June 18, 2024, TSMC's stock is likely to continue its upward momentum given the strong technical indicators and bullish market sentiment. Over the upcoming week, the stock may experience heightened volatility as it navigates its all-time highs, with potential for minor pullbacks towards the support level at $162.92.
Long-Term Investment Potential
Long-term prospects for TSMC appear robust given its critical role in the AI semiconductor market. The expected increase in AI chip demand and potential price adjustments favor sustained revenue growth. However, current overvaluation as per DCF valuations suggests cautious optimism. Investors should consider macroeconomic factors and industry competition when evaluating TSMC's long-term value.
Overall Evaluation
TSMC stands out as a "Hold" candidate. Although technical and market sentiment suggests near-term bullishness, the intrinsic value analysis and high P/E ratio indicate potential overvaluation. Long-term growth prospects remain strong, but investors may want to wait for more favorable entry points or further validation of its growth trajectory relative to market prices.
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