Leading contract chip manufacturer Taiwan Semiconductor Manufacturing (NYSE:TSM) has undeniably been a market darling so far in 2024. The stock’s ascent to an all-time high of $193.47 on July 11 shows its dominant position in the global chipmaking landscape.
However, this impressive advance has propelled TSM’s valuation metrics to elevated levels, raising concerns about the sustainability of the price rally. In fact, TSM shares, which have come under pressure in the second half of July, are now trading 17% below its all-time highs.
Make no mistake, the long-term outlook for TSM remains robust due to its dominance in the chipmaking industry. Yet, a near-term price decline could present a more attractive entry point for investors seeking to capitalize on TSM’s growth trajectory. We suggest a cautious approach: it may be wise to hold off on buying TSMC stock in the immediate term.
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