Taiwan Semiconductor Manufacturing Co. (TSMC) reached a new all-time high on Tuesday, driven by sustained enthusiasm for artificial intelligence and strong ties with Nvidia. The stock closed at NT$2,380 in Taipei, up 1.06%, contributing approximately 200 points to the Taiex index, which itself set a fresh record at 45,557.31.
AI Demand Propels Gains
The rally was fueled by optimism around AI advancements showcased at Computex Taipei, the region's largest tech trade show. Kerry Huang, an analyst at Concord Securities, noted that excitement over AI applications helped offset geopolitical concerns. TSMC's U.S.-listed shares also climbed, finishing at $435.63 in New York, a gain of $17.63.
Valuation Red Flags
Despite the bullish momentum, valuation metrics from GuruFocus raised caution. The firm's discounted cash-flow model estimated TSMC's intrinsic value at $353.17, implying a negative margin of safety of 18.5% relative to the current price of $418.45. More strikingly, its GF Value model pegged fair value at $304.35, suggesting the stock is 43.1% overvalued after a 41% surge year-to-date.
Strong Operational Performance
TSMC's fundamentals remain robust. April revenue came in at NT$410.73 billion, a 17.5% year-over-year increase, while cumulative revenue for the first four months of 2026 rose 29.9% to NT$1.545 trillion. The company reported first-quarter revenue of $35.90 billion and guided for second-quarter revenue between $39 billion and $40.2 billion, with a gross margin target of 65.5% to 67.5%.
CEO Expresses Confidence
CEO C.C. Wei described AI demand as "extremely robust" during an April analyst call, expressing confidence in the multi-year AI trend. TSMC raised its full-year revenue outlook and indicated capital spending would approach the upper end of its $52 billion to $56 billion forecast.
Nvidia and Political Risks
Nvidia remains a key customer and peer reference point. CEO Jensen Huang stated at Computex that Nvidia has sufficient supply for "very robust growth" but remains supply constrained. Political stability in Taiwan continues to be a risk factor. President Lai Ching-te emphasized Taiwan's commitment to peace and stability across the Strait, linking the island's stability to the global AI supply chain.
Market analysts caution that flawless execution may already be priced into TSMC's stock. While valuation models may be conservative if AI demand and margins continue to expand, any slippage in Nvidia demand, chip pricing, or cross-Strait relations could trigger significant downside.
Outlook
With rotational buying active and risk appetite growing among local investors, the Taiex is expected to test the 46,000 level soon, according to Kerry Huang. However, the valuation gap highlighted by GuruFocus serves as a reminder of the potential volatility ahead.
