Taiwan Semiconductor Manufacturing (TSM) cleared another early buy point on Tuesday, extending a rebound that already carried the stock above its 50-day moving average last week. The move comes alongside a broader chip-sector rally and a new TSMC-ASML collaboration on next-generation lithography equipment.
Taiwan Semiconductor Manufacturing, the world's leading contract chipmaker known as TSMC, cleared a recent high of 436.04 on Tuesday, offering an early buy point. The stock advanced 2.4% to 439.17 in recent trades.
The breakout builds on a move from last week, when TSM jumped above its 50-day moving average line on Friday. Chip stocks broadly rallied that day, and TSM also broke a downward-sloping trendline. The stock has also formed a cup base with a buy point of 479, which is also its all-time high, reached on June 30.
Chip rally lifts the sector
The Philadelphia semiconductor index, known as SOX, rose 1.6% in early afternoon trades Tuesday. The index tracks the 30 largest chip companies traded in the U.S., including TSM. TSMC makes leading-edge chips, including those used for artificial intelligence, for customers such as AMD, Apple, Broadcom and Nvidia.
TSMC and ASML target larger lithography masks
Early Tuesday, TSMC announced a collaboration with ASML to transition the industry to larger-format extreme ultraviolet lithography photomasks, moving from the current 6-inch format to 12-inch masks. TSMC has targeted a 12-inch mask pilot line by 2031 and full production of advanced node chips by 2033. TSMC said the larger masks are expected to increase fab productivity and lower chipmaking costs.
Fundamentals back the technical setup
TSM stock sits on the IBD Tech Leaders list. It carries an IBD Composite Rating of 92 out of 99, above the 90-or-better threshold IBD uses to flag the best growth stocks. The Composite Rating blends fundamental and technical metrics to gauge a stock's strength. Taiwan Semi carries a modest 2.43% average true range, reflecting relatively low volatility compared with many AI stocks. TSMC is scheduled to release its August sales on Thursday.
Source: Investor's Business Daily
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