Is Taiwan Semiconductor (TSM) Setting Up for a Big Move?

Taiwan Semiconductor Manufacturing Company (TSM) is the world’s largest dedicated chip foundry, with over 58% market share. Many leading fabless chip makers — including Qualcomm (QCOM) and Advanced Micro Devices (AMD) rely on TSM to manufacture their smallest and most powerful chips…

Taiwan Semiconductor Manufacturing Company (TSM) has been benefiting from a strong appetite for new chips. As the global chip shortage is expected to continue for some time, that appetite should continue to grow. In fact, the company recently stated that its capacity is expected to remain tight through next year due to this demand.

As of the end of September, the company had $30.6 billion in cash compared with $4.3 billion in short-term debt. In the most recent quarter, net income was up 14.8% year over year. Analysts expect earnings to jump 14.4% in the current quarter.

The stock looks a bit overvalued with a forward P/E of 24.21. TSM has shown mixed performance since early March, as shown in the chart below.

Take a look at the 1-year chart of TSM below with added notations…

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