Chip maker Taiwan Semiconductor’s (NYSE:TSM) stock is swaying due to billionaire investor Warren Buffett’s latest comments. At the most recent shareholder meeting of conglomerate Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) which was held on May 6, the Oracle of Omaha disclosed his concern about the rising geopolitical tensions between the U.S. and China.
Don't Miss out on Research Tools:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
Although the billionaire remains a fan of TSMC, the growing possibility of China invading Taiwan was the sole reason for dumping TSM stock, Buffett commented. Buffett praised TSM, calling it “one of the best-managed companies and important companies in the world.” He added, “I don’t like its location and re-evaluated that, … [but] there’s no one in the chip industry that’s in their league, at least in my view.”
It was not long before Berkshire took a roughly $4 billion stake in TSMC in November 2022. Since then, TSM stock has gained over 40%. However, in February 2023, Buffett trimmed the stake by nearly 86% owing to geopolitical concerns. Berkshire now owns only 0.2% of Taiwan Semiconductor.
Meanwhile, Taiwanese officials have decided to continue supporting TSMC and promoting it as a stable, safe, and technologically advanced company. The officials reaffirmed the fact that TSMC plays a crucial role in the world’s semiconductor market. Although geopolitical events cannot be controlled, the government will continue to bolster Taiwan’s chip industry and pledge the importance of Taiwan’s security.
Is TSM Stock Worth Buying?
With four unanimous Buys, TSM stock commands a Strong Buy consensus rating on TipRanks. The average Taiwan Semiconductor price target of $118.67 implies 39.5% upside potential from current levels. Also, TSM currently trades at a relatively low P/E of 13.2x, implying a very attractive multiple compared to its peers.
