Wealth Manager Believes Taiwan Semiconductor (TSM) is ‘Very Undervalued’ – Here’s Why

We recently published a list of 10 Stocks in Wall Street’s Watchlist. In this article, we are going to take a look at where Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) stands against other stocks in Wall Street’s watchlist.

Dan Niles, Niles Investment Management founder, in a latest program on CNBC reiterated his concerns about a slowdown in AI spending and said that major technology companies were already facing the impact of a downbeat trend in the industry before the tariff wars started:

“When the MAG 7 reported the December quarter or calendar Q4, six of the seven had their March revenue estimates already cut. So think about that for a second. But the thing is, when the Fed’s cutting like it was last year, nobody cares, right? If the stocks are going up, the charts look good. Why worry about fundamentals or valuations?,” Niles said. “Because the stocks are going higher. So looking forward, I expect all the estimates to come down yet again for the June quarter. When these companies report the March quarter, they were already having troubles when they reported the December quarter before all this tariff stuff kicked in.”

Niles said that companies were buying more ahead of the China tariffs because they expected that duties were coming from the US.

“You can just see that from the China export data already, where for China as a whole, in the month of March, exports were up 12.4%. People were expecting 4.6%. So that’s a massive beat there. And so you can already tell demand’s being pulled forward. So my thought was there was a payback period coming anyway.”

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Wealth Manager Believes Taiwan Semiconductor (TSM) is ‘Very Undervalued’ - Here’s Why

Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM)

Number of Hedge Fund Investors: 158

Steve Weiss, Founder and Managing Partner of Short Hills Capital Partners, said in a recent program on CNBC that he’s buying Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) shares because he believes the stock is undervalued.

“Taiwan Semi—look, I don’t think anybody’s crazy enough to stop the supply chain for semiconductor chips. And I don’t think there’ll be, you know, heavy tariffs on it, particularly when they talk about investing. But they’ve got a queue of people waiting for capacity—we hear Intel talk about that all the time. So to me, this stock is very undervalued.”

Baron Emerging Markets Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q4 2024 investor letter:

“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) contributed in the fourth quarter due to a cyclical recovery in semiconductors and significant incremental demand for AI chips. We retain conviction that TSMC’s technological leadership, pricing power, and exposure to secular growth markets, including AI/high-performance computing, automotive, 5G, and internet of things, will allow the company to sustain strong double-digit earnings growth over the next several years.”

Overall, TSM ranks 3rd on our list of stocks in Wall Street’s watchlist. While we acknowledge the potential of TSM, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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.

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Disclosure: None. This article is originally published at Insider Monkey.