TSM (TSMC) fell 3.45% in pre-market on December 18 2025 underperforming S&P 500 and Nasdaq despite revenue growth

TSMC (TSM) fell 3.45% in pre-market trading on December 18, 2025, underperforming broader market indices such as the S&P 500 (-1.16%) and Nasdaq (-1.81%). The decline came despite the company’s recent revenue growth and a projected earnings increase of 21.43% year-over-year.

Analysts highlighted TSMC’s strong position in AI chip manufacturing for clients like Nvidia and Broadcom, which has driven 24.5% year-over-year revenue growth.

Bernstein and SocGen reaffirmed an Outperform rating with a $330 price target, citing momentum in fourth-quarter sales. However, recent stock volatility suggests market skepticism about near-term execution risks amid high valuation expectations.

Investor sentiment was further tempered by a downgrade in Zacks Consensus EPS estimates and a #4 (Sell) Zacks Rank. While TSMC’s forward P/E of 28.33 aligns with its sector average, the PEG ratio of 0.99 indicates valuation is partially justified by growth prospects. Earnings releases and quarterly guidance will remain critical for near-term direction.

Given the recent volatility and mixed signals from analysts, the market is closely watching how TSMC executes its long-term AI chip strategy. A positive earnings surprise could provide a catalyst for a rebound in the stock, particularly as AI demand continues to grow. Meanwhile, macroeconomic factors such as interest rates and global demand will also play a role in shaping the stock’s trajectory over the next few quarters.