TSMC Earnings: Negative News and Upbeat Guidance Create Entry Opportunity

We are maintaining our TWD 1,380/USD 213 fair value estimate for wide-moat Taiwan Semiconductor Manufacturing Co. after the company reported second-quarter results and third-quarter guidance that was on track with our full-year estimates and more bullish than PitchBook consensus. Negative news like US presidential candidate Donald Trump's remarks on Taiwan and a Bloomberg article on possible new export restrictions should have limited direct impact on TSMC's operations, as most of the chipmaker's direct customers are from the US or Taiwan. We see this week's pullback as an entry point for investors seeking an inexpensive way to gain exposure to artificial intelligence and overall semiconductor growth.