Taiwan Semi's $100 Billion Investment: Fate of the Chipmakers

Key Points

• The latest round of tariffs has done the opposite of what economists expected, as new rounds of investment have come in for the chipmaking industry.
• Taiwan Semiconductor led the way through a $100 billion additional allocation to domestic manufacturing.
• Wall Street likes this setup, seeing a double-digit upside in this and other names.

Economists have floated the effects of tariffs on the global economy, but investors need to realize that these views are just that—opinions. Opinions based on theory that may or may not play out in the end, so what matters more is what is actually happening in the economy and the markets today. The answer is clear in this case, and that is increased interest for the biggest technology sector names to invest in the United States rather than away from it.

Companies like Apple Inc. NASDAQ: AAPL, Oracle Co. NYSE: ORCL, and others have decided to invest billions in their presence within the United States economy and manufacturing process. Now, economists would have suggested that tariffs might have caused the opposite effect to drive these names further away from dealing with the United States. Just the opposite happened, but one player in particular stands out in importance.

Taiwan Semiconductor Manufacturing NYSE: TSM has announced its latest round of investment in the United States, this time up to $100 billion, on top of its previous $65 billion position. This is important because Taiwan Semiconductor owns over 90% of the semiconductor supply chain, essential to the future of artificial intelligence and essentially all other chips needed in several industries.

Taiwan Semiconductor Stock: Unpriced Potential

Now that shares of Taiwan Semiconductor stock have traded down to 80% of their 52-week high, investors might wonder whether that makes for a potentially good buying opportunity today. While the expansion of their manufacturing presence in the United States is definitely bullish, investors shouldn’t get too carried away just yet.

First, they should check with the markets and Wall Street analysts. For starters, Barclays analysts decided to reiterate their Overweight rating on Taiwan Semiconductor stock as of January 2025, this time also boosting their valuation targets to a high of $255 per share. They call for not only a new 52-week high but also a net rally of 38% from today’s price.

Faced with this upside potential and the considerable outcome from this new investment in the United States, which might bring on additional institutional capital investment, investors can now note clear evidence pointing to the decline and capitulation from short sellers.

Over the past month, up to 9% of Taiwan Semiconductor’s short interest has declined as short sellers decide that the risk is not worth the reward at today’s lows. At the same time that these short sellers abandoned their views, up to $9.8 billion of institutional capital also made its way into the company over the past quarter.

Now that investors see the upside potential in Taiwan Semiconductor after its most recent investment announcement, it is time to understand how this might affect the rest of the chip industry.

NVIDIA’s Redemption Time at $110 Per Share

It’s almost as if the market knew that Taiwan Semiconductor would announce the positive news ahead of time since shares of NVIDIA Co. NASDAQ: NVDA bottomed a day prior at around $110 to $115 per share and are now attempting to recover their ground after selling down to 77% of their 52-week highs.

As of February 2025, analysts at Cantor Fitzgerald also saw NVIDIA stock falling into an Overweight rating. The stock commands a valuation of up to $200 per share, calling for an implied upside potential of 70.5% from where it trades today.

Investors should also remember that what is good for NVIDIA is good for Taiwan Semiconductors, given that they are one of each other’s largest suppliers and consumers.

Despite the recent decline in NVIDIA stock post-earnings, bearish traders found no reason to stick around and keep betting against this leader.

This is why up to 11% of the company’s short interest fell over the past month, giving investors another sign of bearish capitulation.

Intel’s Discount Might Be Erased

After a sluggish year, Intel NASDAQ: INTC stock trades at a dismal 45% of its 52-week high, but that might not last long.

Considering how bullish the market is becoming on the investment shifts in the United States manufacturing of chips and semiconductors, Intel might be next in line for a boost.

And there is more than just sentimental backing for this belief. Investors can look to Wall Street’s earnings per share (EPS) forecasts for $0.16 in the fourth quarter of 2025.

This swing is a massive change from today’s net loss of $0.02 per share, indicating a potential valuation boost in the stock as well.

That might explain why UBS Asset Management decided to boost its holdings in Intel stock by 8.2% as of February 2025, netting its position at $1.3 billion today, or 1.5% ownership in the company.