TSMC stock plunges 3.45% amid broader market weakness despite strong AI-driven revenue growth

Taiwan Semiconductor Manufacturing Company (TSMC) fell 3.45% in pre-market trading on December 18, 2025, closing at $276.96, outpacing the S&P 500’s 1.16% decline. The drop came despite strong year-over-year revenue growth driven by AI chip production for Nvidia and Broadcom, as well as robust demand for Apple’s mobile phone chips. Analysts at Bernstein SocGen Group had recently reiterated an “Outperform” rating with a $330 price target, citing the company’s performance ahead of fourth-quarter guidance.

However, the stock faced downward pressure amid broader market weakness, with the Nasdaq declining 1.81%. TSMC’s recent earnings and revenue projections—forecasted at $2.72 per share and $32.6 billion, respectively—highlight its growth potential but contrast with its current Zacks Rank of #4 (Sell). The semiconductor foundry’s forward P/E ratio aligns with its industry average, while its PEG ratio of 0.99 suggests valuation reflects expected earnings growth. Analysts note that short-term business trends and estimate revisions remain critical for near-term performance.

The decline follows mixed momentum in recent months, including a 6.5% monthly revenue drop in November, though annual growth remains robust at 24.5%. With AI-driven demand expected to persist, investors are weighing near-term volatility against long-term fundamentals, including TSMC’s monopoly in advanced chip manufacturing and its role in global AI infrastructure.

Market analysts remain divided, with some emphasizing the long-term structural growth from AI and others pointing to near-term macroeconomic concerns. Despite the recent dip, TSMC continues to maintain its leadership position in the semiconductor industry, with ongoing R&D investment and strategic partnerships reinforcing its competitive edge.