TSM Stock Slides 10% as Chip Rout Deepens After Democrats' Midterm Wins

Shares of Taiwan Semiconductor Manufacturing Co. (TSM) fell 10% in a single session as a chip-sector sell-off entered its second day. The decline followed Democrats' larger-than-expected performance in the US midterm elections, which fed concerns that AI infrastructure spending could slow. TSMC issued no company-specific news during the sell-off.

Sector-wide selling hits Taiwan peers

The pressure extended well beyond TSMC. United Microelectronics (UMC) dropped 16%, even though it reported that October revenue rose 18.3% from a year earlier to NT$25.2 billion, a faster pace than its 16.3% growth for the year so far. Chip packager ASE Technology fell 19%, despite a third-quarter revenue increase of 44.8% to NT$244.2 billion.

US equipment maker Lam Research fell 10%. Around 18% of its revenue comes from customers in Taiwan. Bloom Energy also dropped 17%, despite announcing a 900 MW fuel cell deal with NTT DATA on the same morning.

Additional pressure from customers and suppliers

Market commentary pointed to two further developments. Qualcomm, a TSMC customer, warned about memory costs after the previous day's close. Bloomberg also reported that Micron had paused a $4.5 billion plant in Taiwan, according to the report.

Some analysts argue the sell-off is disconnected from TSMC's fundamentals. One commentary noted that the company's third-quarter earnings per share of $4.60 beat the $4.46 consensus, its third straight beat, and that revenue rose 41.2% in dollar terms to $46.72 billion. Another said TSMC traded at about 16 times forward earnings before the drop, below its five-year average of 18 times.

Outlook and guidance

TSMC guided fourth-quarter revenue to $52.3 billion to $54.3 billion and set its 2026 capital expenditure range at $60 billion to $64 billion. Chief financial officer Wendell Huang said the company expects revenue growth to outpace capital spending. Chief executive C.C. Wei said demand for AI accelerators remains well ahead of supply.

Analysts remain broadly positive. One commentary cited a 24/7 Wall St. price target of $516.16, while noting that 20 of 21 analysts tracked rate the stock a buy or strong buy, with a consensus target of $584.39. Investors will watch TSMC's October sales, due next week, as the first read on its fourth-quarter guidance. Its 2027 outlook, expected in mid-January, will show whether AI spending is slowing. Risks cited in coverage include Taiwan Strait tensions and rising overseas-fab costs.

Shares of TSMC had fallen about 11% over the past month before the latest decline, according to 24/7 Wall St. data.

The company has not announced any change to its spending plans, and the sell-off's cause remains a matter of market sentiment rather than a company disclosure.

What we know so far

TSMC's shares fell 10% and UMC dropped 16% as investors reacted to political developments and sector-wide concerns about AI spending. Company fundamentals reported this quarter remained strong, and the next signals will be October sales and the January guidance update.