Taiwan Semiconductor Manufacturing Company Limited (TSM): A Bull Case Theory

We came across a bullish thesis on Taiwan Semiconductor Manufacturing Company Limited (TSM) on Stock Whisperer’s Substack. In this article, we will summarize the bulls’ thesis on TSM. Taiwan Semiconductor Manufacturing Company Limited (TSM)'s share was trading at $191.98 as of 23^rd May. TSM’s trailing and forward P/E were 23.12 and 19.92 respectively according to Yahoo Finance.

Taiwan Semiconductor Manufacturing Company (TSM) is emerging as a compelling near-term investment opportunity, with technical, fundamental, and sentiment-driven tailwinds converging to support a potential upward move. Recent trading action shows a decisive bullish reversal, with three consecutive weekly gains and strong support at $160, while resistance around $180 sets the stage for a potential breakout. Increased institutional buying, confirmed by rising volumes and positive momentum indicators such as an impending MACD crossover and shrinking bearish histogram bars, further validate the shift in investor sentiment.

On the fundamental front, TSM trades near its book value with a P/B ratio of 0.97, and a modest P/E ratio of 22.28, suggesting an attractive valuation relative to growth expectations. Despite short-term EPS headwinds, the company’s strategic investments in artificial intelligence and high-performance chip manufacturing reinforce its leadership in a capital-intensive industry and provide a solid foundation for long-term growth. TSM’s strong industry positioning as the world’s leading contract chipmaker has enabled it to attract consistent demand from top-tier technology clients, ensuring robust revenue streams.

Positive sentiment has only added to the stock’s momentum, with analyst upgrades to “Strong Buy,” increasing investor confidence, and a favorable news flow reinforcing TSM’s earnings growth and technological innovation. This alignment of bullish technicals, solid valuation, and growing market optimism makes TSM an attractive option for investors seeking short-term upside with long-term strategic value. With support firmly in place and catalysts building, a near-term move higher appears increasingly likely, offering a timely entry point into a globally vital semiconductor powerhouse.

Previously, we have covered Taiwan Semiconductor Manufacturing Company (TSM) in April 2025, wherein we summarized a bullish thesis by Oguz Erkan on Substack. The author argued that TSMC’s dominance in advanced chip manufacturing and strong financials make it undervalued, despite short-term concerns over tariffs and slowing semiconductor spend. With growing AI demand and a forward P/E of 14, the stock was seen as a compelling long-term opportunity. Since our last coverage, the stock is up 22% as of 27^th May.

Taiwan Semiconductor Manufacturing Company Limited (TSM) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 187 hedge fund portfolios held TSM at the end of the first quarter which was 186 in the previous quarter. While we acknowledge the risk and potential of TSM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.