Buy TSM Below $400

Alex Sirois

Mon, May 18, 2026 at 1:52 PM EDT 4 min read

Quick Read

• Taiwan Semiconductor (TSM) fabricates 72.3% of global advanced logic chips with AI and high-performance computing driving 61% of Q1 2026 revenue; the company raised its 2026 revenue growth outlook to over 30%, locked in a $150 billion Amazon AI data center supply contract, and posted 58.4% year-over-year earnings growth with a 46.5% profit margin.

• Geopolitical tension from the Trump-Xi summit in Beijing rattled investors despite strong fundamentals, pushing the stock down to the $400 zone where Polymarket assigns a 98.35% probability that China does not invade Taiwan by June 30, 2026.

• The analyst who called NVIDIA in 2010 just named his top 10 stocks and Taiwan Semiconductor Manufacturing wasn't one of them. Get them here FREE.

Taiwan Semiconductor Manufacturing (NYSE:TSM) at $404.35 looks attractive on weakness below $400 based on the setup discussed below. The stock has already touched $386.12 on May 12 and $391.47 on May 13 before bouncing back, and the setup heading into summer suggests sub-$400 prints look like an opportunity.

TSMC fabricates the world's most advanced logic chips, with a 72.3% share of the global foundry market and customers ranging from Apple to NVIDIA to Amazon. AI and high-performance computing now drive 61% of Q1 2026 revenue, which is why the stock has roughly doubled off its 52-week low of $186.84. What brought it back to the $400 zone is geopolitics, not earnings results.

Trump's Beijing Trip Put Taiwan Back in the Crosshairs

The recent mid-May Trump-Xi summit in Beijing rattled investors who heard softer language on cross-strait policy. Xi reiterated that Taiwan is the core bilateral issue, and short sellers capitalized. That noise is why a stock printing $3.49 in Q1 EPS on an 8.39% beat trades at a forward multiple of 26.

The analyst who called NVIDIA in 2010 just named his top 10 stocks and Taiwan Semiconductor Manufacturing wasn't one of them. Get them here FREE.

The Bull Case: AI Demand Is Not Slowing Down

TSMC raised its 2026 revenue growth outlook to over 30%, locked in a role supplying chips for Amazon's $150 billion AI data center buildout, and authorized a $20 billion capital injection into TSMC Arizona on top of $31.3 billion in advanced capacity appropriations. Profit margin sits at 46.5%, return on equity at 36.2%, and quarterly earnings growth ran 58.4% year over year. Institutions leaned in, with Bessemer adding 67.8% to its position last quarter.

The Bear Case: Concentration and Tariff Risk

Bears point out that TSMC is over 40% of Taiwan's Taiex index, that AI revenue concentration cuts both ways, and that one Simply Wall St DCF model pegs fair value at $215.69. A more punitive U.S. tariff regime on Taiwan-fabbed silicon or an Apple shift toward Intel foundry would compress margins. Sands Capital and First Eagle have both trimmed sizable positions.