Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) stock is sliding on Wednesday as chip names digest a mixed tape.

The Nasdaq is down 0.06% while the S&P 500 has gained 0.27%.

• Taiwan Semiconductor stock is showing positive momentum. What’s the outlook for TSM shares?

The contract chipmaker is expanding advanced chip production as AI customers increase demand for higher-performance, lower-power 3nm and 2nm technologies.

AI Demand Drives 3nm Expansion

Strong orders from major customers, including NVIDIA Corp (NASDAQ:NVDA), Advanced Micro Devices, Inc (NASDAQ:AMD) and Broadcom Inc (NASDAQ:AVGO), are expected to help TSMC reach its year-end target of 180,000 3nm wafers per month ahead of schedule, potentially by the fourth quarter, Technode reported on Wednesday, citing Taiwan-based Economic Daily News.

TSMC has raised this year’s capital expenditure plan to $60 billion to $64 billion, with about 70% to 80% of that spending directed toward advanced process technologies.

TSMC Adds Capacity Across Key Sites

The company is adding three new 3nm fabrication plants in Taiwan, Arizona and Kumamoto, Japan, while also converting some existing 5nm production lines to support more 3nm capacity.

Demand for TSMC’s 2nm process also remains strong, with monthly wafer output expected to approach 100,000 wafers by the end of the year, in line with the company’s production roadmap.

Technical Analysis

From a trend perspective, TSMC is still in a longer-term uptrend, trading about 15.7% above its 200-day SMA ($358.98) and about 4% above its 100-day SMA ($399.47). The near-term picture is choppier: the stock is about 2.5% below its 50-day SMA ($425.84), and the 20-day SMA ($410.99) remains below the 50-day SMA, a short-term bearish alignment.

Earnings & Analyst Outlook

Looking further out, the next major catalyst for the stock arrives with the Oct. 15 (estimated) earnings report.

  • EPS Estimate: $4.03 (Up from $2.92 year-over-year)
  • Revenue Estimate: $42.75 billion (Up from $33.10 billion YoY)
  • Valuation: P/E of 36.6x (Indicates premium valuation relative to peers)

Analyst Consensus & Recent Actions: The stock carries a Buy rating with an average price forecast of $551.67. Recent analyst moves include:

  • Needham: Buy (Raises target to $530 on July 27)
  • DA Davidson: Buy (Raises target to $500 on July 17)
  • TD Cowen: Hold (Raises target to $440 on July 17)

Top ETF Exposure

  • VanEck Semiconductor ETF (NASDAQ:SMH): 9.16% Weight
  • Harbor International Compounders ETF (NYSE:OSEA): 6.75% Weight
  • Nicholas Crypto Income ETF (NYSE:BLOX): 8.20% Weight

Significance: Because TSMC carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely trigger automatic buying or selling of the stock.

TSM Price Action

Taiwan Semiconductor shares were down 0.55% at $414.88 at the time of publication on Wednesday, according to Benzinga Pro data.

Image via Shutterstock

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