Taiwan Semiconductor Manufacturing (TAI:2330) has endured the difficult year 2022. At the current trading of $98.36, the stock is trading at a significant discount from the highs of $145 reached on January 13, 2022.
A general decline in tech stocks and Covid-19 lockdowns in China have dampened consumer demand and hit supply chains. Consequently, TSMC’s decline has been due to market dynamics rather than the company’s fundamentals.
At the company level, TSMC sees a strong chip demand ahead. It projects revenue of between US$17.6 billion and $18.2 billion in the second quarter of 2022. This is higher than a record $17.05 billion in revenue in the first quarter of 2022.
However, despite the boosted sales projections, TSM closed down 3.09% on April 14 in New York, the date of the earnings. The decline showed that investors had already priced the stock to a record quarter. However, expectations of dampened global sentiment prompted caution among investors.
TSMC stock fails to excite despite strong earnings
Technically, TSM is trading in TSM closed down 3.09% after reporting record revenues in Q1 2022.a support zone of around $98. The stock is increasingly bearish and could find the bottom of the support at $96. We cannot rule out further drop as an RSI reading of $38 shows the stock is yet to hit oversold levels. With no immediate or short-term catalyst for stock appreciation except the earnings result, TSM could take longer to go higher.
Concluding thoughts
Strong chip demand and robust earnings make TSM a good stock. However, investors may have to wait to pick a lower bottom as the stock remains bearish due to weak global sentiment. The stock could find support
