Any investor who has been exposed to the United States technology sector has learned the meaning of volatility over the past few quarters, especially as President Trump's trade tariffs start to significantly impact the sector’s future expectations and forecasts.
However, not all are doomed for this space.
Now that talks between the United States and China (arguably the most important ones) have advanced enough to bring a deal draft to the table, investors who were sitting on the sidelines waiting for a resolution might want to get their accounts ready for some action shortly. With this in mind, not all stocks will be treated equally, and investors should remember that this “trade war” will take a bit longer to fully resolve.
This is why shares of Taiwan Semiconductor Manufacturing (NYSE: TSM) become a top candidate for anyone looking to implement the best idea in a post-tariff world. Rooted in fundamentals and the chart setup itself, investors can find the best of both safety and growth in this company for the coming months, a play that can mitigate most of the volatility expected from the sector during these economic conflicts.
Why Taiwan Semiconductor Wins
Understanding the semiconductor and chipmaking industry can be of great help for investors trying to navigate this environment, and they will quickly find that Taiwan Semiconductor stock stands near the top of the hierarchy there. Controlling nearly 80% of the global chip supply chain does come with numerous shareholder benefits in this case.
That strong positioning offers the company a financial profile that is nearly unmatched in the rest of the industry. Pricing power and market share dominance are quantified in the company’s gross profit margins of just under 60% over the past 12 months.
This high capital retention rate enables management to allocate and reinvest capital more effectively for business growth and debt management, among other benefits that ultimately benefit shareholders. This is why Taiwan Semiconductor also reports returns on invested capital (ROIC) rates of up to 22%, one of the most important metrics for any value investor.
ROIC is vital because annual stock price performance tends to mirror the long-term average ROIC rate; therefore, in this case, investors are receiving an attractive rate on their investment in a company that is as safe as they come. Of course, this doesn’t mean there are no risks in this name.
Today’s tariff uncertainty has left some footprints to be considered in Taiwan Semiconductor's stock chart, some of which investors can take advantage of today to align their portfolios in the right direction moving forward.
Taiwan Semiconductor’s Chart Left Some Clues
Every investor is aware of the massive decline in all stocks that occurred during the so-called “Liberation Day” announcement in April 2025. Most stocks in this period fell to less than 80% of their 52-week highs, an official bear market in terms of Wall Street characterizations.
What is interesting about this period, especially for a $920 billion company like Taiwan Semiconductor, is the time it took for the stock to recover. Usually, a big company takes an average of a year to recover from such a decline, as the larger the organization is, the more it resembles turning a tanker ship in the middle of the ocean.
Smaller businesses are like speedboats, more nimble in navigating different price levels. Considering that this chipmaking behemoth turned its performance around in less than 90 days to now trade within 94% of its 52-week high, investors can safely assume that the worst is past the company and nothing but upside lies ahead.
Where the Compass Points Next
Now that the momentum for Taiwan Semiconductor stock has become clear today, investors may wonder where the next steps lie in the stock’s future.
Taken as an indication, up to $8.3 billion of institutional capital flowed into the company over the most recent quarter, a sign of further interest in buying new breakouts during this aggressive run-up.
Additionally, Simon Coles (an analyst from Barclays) decided to reiterate his Overweight rating on Taiwan Semiconductor stock as of early June 2025, this time also placing a valuation target of up to $240 per share on it.
Even though the stock is already flirting with its 52-week highs, this target implies up to 12% more upside potential.
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