TSMC Slides as AI Jitters Clash With Lofty Hopes

TSMC ( (TSM) ) has fallen by -8.19%. Read on to learn why.

TSMC shares dropped 8.19% over the past week as investors weighed short‑term uncertainty around AI chip demand and options positioning against the foundry giant’s otherwise solid fundamentals. Sentiment was pressured by news that key customer Nvidia has halted production of its China‑bound H200 AI chips amid U.S. export scrutiny and geopolitical tensions, redirecting TSMC capacity toward its future Vera Rubin platform. That shift reinforced concerns that near‑term China demand for advanced chips could be choppy, adding volatility to names across the high‑end semiconductor supply chain, including TSMC.

Options activity in TSMC underscored this caution. Bearish flow picked up as the stock pulled back, with puts modestly leading calls and implied volatility sitting in the upper end of its one‑year range, signaling investors were actively paying for downside protection and bracing for wide daily moves. At the same time, earlier in the week, options skew had flattened even as volume stayed elevated, pointing to a market that is nervous about near‑term swings but not yet capitulating on the longer‑term AI story.

Fundamentally, TSMC continues to project strength, which helped limit the selling to a pullback rather than a collapse. The company made a minor technical upward adjustment to its already‑approved Q3 2025 dividend per share, a routine move that signals stable cash‑return discipline. Recent filings with the U.S. SEC came with a clean audit opinion, January revenues jumped more than 36%, and management is pressing ahead with up to $75 billion in AI‑focused capital spending. Despite valuation worries at roughly 32 times earnings and execution risks from heavy investment, both human analysts and AI‑driven models keep TSMC rated Buy/Outperform with price targets well above current levels, betting that the present volatility is a pause in a longer AI‑driven uptrend rather than the end of it.