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TSMC stock jumped 13% on Tuesday: what happened?

on Nov 15, 2022
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  • Warren Buffett's Berkshire Hathaway buys $4.1 billion worth of TSMC stock.
  • Cowen analyst reacts to the news on CNBC's "Squawk on the Street".
  • Taiwan Semiconductor Manufacturing is still down 40% versus its YTD high.

Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) is up more than 10% this morning after a regulatory filing revealed legendary investor Warren Buffett to have built a sizable stake in the world’s leading chipmaker.

Buffett spent $4.1 billion on the TSMC stock

Reportedly, Buffett’s Berkshire Hathaway Inc bought about 60 million ADRs (American Depository Receipts) of the Taiwanese company in the third quarter of 2022 for $4.1 billion.

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The “Oracle of Omaha” is known to invest in quality stocks that are trading at a deep discount and ones that pay a dividend.

That’s probably why the TSMC stock found a spot on his portfolio. Between July and September, it was trading down about 45% on average versus its year-to-date high and paid a dividend yield of close to 2.50%.

His stamp of approval signals that the billionaire investor is calling a bottom in this semiconductor stock. Last month, the chipmaker reported market-beating results for its fiscal third quarter.

Cowen’s analyst Krish Sankar reacts to the news

Taiwan Semiconductor Manufacturing Co sits right at the heart of the supply chain, noting prominent names like Nvidia and Qualcomm as customers. It also supplies exclusively for the custom silicon chips that Apple uses in its latest devices.

Reacting to the news on CNBC’s “Squawk on the Street”, Cowen’s Krish Sankar said:

It’s a best of the breed company; best foundry in the world. They know how to execute really well. They’re one of the leading-edge manufactures and probably the only game in town for sub-five nanometre technology.

Still, the analyst said if it were him, he would have waited for a better entry point to invest in the TSMC stock.