Buy The Dip On These 10 Semiconductor Stocks Tumbling On China H20 Chip Sale Ban

1. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 186

Taiwan Semiconductor Manufacturing is a well-known global supplier of semiconductor equipment based in Taiwan. The company benefits directly from semiconductor technological innovation, as many companies use its foundry for manufacturing their chips. The stock is taking a hit after news of H20 chip sales restrictions by the US government.

Amid this negativity, there is one positive for the company that investors may have missed. AMD recently announced it will start producing some of its latest chip designs at TSM’s Arizona factory. Bagging such a big client means a lot for the company, especially as it ensures the company can keep its clientele without having to worry about geopolitical issues in Taiwan.

TSM stock has taken a considerable hit since its previous earnings report, but yesterday’s earnings beat has brought back the optimism that has driven most of the sector in the last year. It trades at a PE ratio of 22.32, which is in line with its 5-year average PE of 22.51. The price-to-book is also at the same level as its 5-year average, so there is hardly any discount available. However, as the tariff uncertainty continues and the stock dips further with the broader market, it is one worth having on the watchlist in case the opportunity presents itself.

While we acknowledge the potential of TSM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.