Taiwan Semiconductor Manufacturing (NYSE:TSM) Stock Could Be 15.5% Overvalued After Its Strong Run - simplywall.st

Taiwan Semiconductor Manufacturing (TSMC) has shown strong stock performance, with a 121.61% total shareholder return over one year and a 44.59% year-to-date gain. However, Simply Wall St suggests the... Read original →

TSMC’s current valuation has priced in overly optimistic AI chip demand. While its 3nm and EUV capabilities underpin NVIDIA’s dominance, diminishing returns on process leadership are emerging. Upstream, ASML’s delivery bottlenecks constrain capacity expansion; downstream, clients actively diversify to GLOBALFOUNDRIES and Samsung to mitigate geopolitical exposure. Post-U.S. CHIPS Act subsidies, TSMC’s Arizona operations face significantly higher costs and compliance burdens than its Taiwan, China fabs. With a 15.5% valuation premium, rivals may seize mid-tier AI/HPC and automotive chip opportunities. Over the next 12–24 months, any slowdown in AI server capex or tightened U.S.-China tech controls will expose TSMC’s customer concentration risk, making its stock more vulnerable to correction than peers. The market must look beyond the 'moat' narrative to confront supply chain politicization.