After sell-offs yesterday, Taiwan Semiconductor Manufacturing (NYSE: TSM) stock is regaining ground in Friday’s trading. The company’s share price was up 4.5% as of 3:30 p.m. ET. Meanwhile, the S&P 500 index was up 1.6%, and the Nasdaq Composite was up 2%.
TSMC stock saw substantial sell-offs yesterday on news that imported products from China will now be taxed at a 145% rate, but it’s roughly bounced back from those losses today. It’s been an incredibly volatile week for the stock market, but the chip-fabrication leader’s share price is poised to close out the period with solid gains.
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The stock market has seen nearly unprecedented swings this week. Valuations headed lower early in the week’s trading — only to see a massive rebound after President Donald Trump announced a 90-day pause on reciprocal tariffs for all countries other than tariffs. Thursday brought sell-offs on news that tariffs on China were actually higher than expected, but investors are buying back into the market today — and TSMC is rising as a result.
TSMC stock will likely continue to see big valuation moves in conjunction with macroeconomic and geopolitical news. In the face of risk factors and increased uncertainty on those fronts, the company’s share price is down roughly 20% year to date. The valuation pullback has pushed the company’s forward price-to-earnings multiple down to approximately 17.5 — a level that looks quite cheap given the company’s recent business momentum and long-term strength in the artificial intelligence (AI) chip manufacturing category.
On the other hand, the earnings picture is in flux right now — and it’s difficult to assess stocks along traditional valuation metrics. Adding another complicating factor, concerns that China could invade Taiwan at some point in the next few years appear to be at the center of the escalating trade war and geopolitical tensions.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
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