There is a lot of speculation about the effects of President Donald Trump's tariff plans, but none have been seen yet, as many companies are still sorting through how they will be affected. As first-quarter results roll out, you'll get more commentary on how tariffs will affect various businesses, but one very important company has already offered commentary on tariffs.
Taiwan Semiconductor (TSM +5.08%) is one of the world's most important companies, as it is the chip foundry for many of the world's top companies. It made a comment on tariffs that will likely shock readers, and all investors should heed its CEO's words.
TSMC's CEO is bullish on the rest of 2025
Taiwan Semiconductor is one company that could be affected by tariffs, as most of its chips are made in Taiwan. While TSMC has built a plant in Arizona and announced a $100 billion investment to build more facilities in the U.S., the vast majority of its production is overseas.
On another note, TSMC's chips haven't yet been slapped with a huge tariff rate. Semiconductors are currently exempt, but President Trump has noted that there will be an upcoming semiconductor tariff. Regardless, the possibility of tariffs affecting demand for its chips hasn't been felt yet, which is why TSMC's CEO C.C. Wei had this to say on the company's recent Q1 conference call:
We understand there are uncertainties and risks from the potential impact of tariff policies. However, we have not seen any change in our customers' behavior so far. Therefore, we continue to expect our full year 2025 revenue to increase by close to mid-20s percent in U.S. dollar terms.
So, TSMC hasn't seen any effects of tariffs. Let's see how that shakes out if a semiconductor-specific tariff is announced, but it's business as usual for Taiwan Semiconductor as of right now. This likely isn't the case for every company, so this speaks to Taiwan Semi's strong position.
Despite its strong growth outlook and lack of tariff effects, the stock has been heavily sold off, which allows investors to scoop up shares for a steal.
The stock still hasn't reacted to the news
Despite strong Q1 results, Taiwan Semiconductor still trades like its business is about to fall off a cliff due to tariff effects.
TSM PE Ratio data by YCharts
Nineteen times trailing earnings and 16 times forward earnings is a dirt-cheap price tag for one of the world's most important companies, especially when it projects that 2025 revenue will increase in the mid-20% range.
This stock looks even cheaper when you compare Taiwan Semiconductor to the broader market, as measured by the S&P 500 (^GSPC +0.80%). The market trades for about 21.4 times trailing earnings and 19.8 times forward earnings, which is far more expensive than TSMC's stock in both cases.
The CEO of this company, who is much better connected in the tech world than almost anyone else, just told investors that the company hasn't felt any tariff impacts and doesn't anticipate any. However, the stock hasn't recovered from this sell-off and continues to move lower even after his optimistic statements. This clearly indicates that it's a great buying opportunity for the stock, and I think it's among the best buys in the market right now.
Even if a semiconductor tariff slightly affects TSMC's demand, it's still the most important chip foundry in the world, and its steps to move some production to the U.S. will benefit it. Thanks to AI, there's just too much growth in the chip industry, and Taiwan Semiconductor is one of the best ways to invest in this trend.
