Taiwan Semiconductor Manufacturing (NYSE:TSM) is back in focus after a recent share price move, with the stock closing at US$370.54. That puts recent returns and underlying financial metrics under closer investor scrutiny.

The latest move comes on top of a 10.65% 1 month share price return and a 30.18% 3 month share price return. The 1 year total shareholder return of 88.88% and 5 year total shareholder return of 214.14% point to strong long term momentum.

If Taiwan Semiconductor Manufacturing has you thinking about the broader chip story, it could be a good moment to see what else stands out in our list of 34 AI infrastructure stocks.

With the share price near US$370 and recent returns running hot, the real question now is whether TSM is still trading below what its numbers suggest, or if the market is already banking on years of future growth.

Most Popular Narrative: 7.4% Undervalued

According to the most followed narrative, TSM's fair value sits at $400 per share, which is above the recent $370.54 close and frames the current debate.

TSMC is the central pillar of the global semiconductor ecosystem, powering the AI revolution with unmatched scale, cutting edge process technology, and disciplined execution. With record profits, dominant client base, and massive expansion underway, both in Taiwan and abroad, it stands as a low risk way to own the AI infrastructure wave.

Curious what sits behind that $400 figure? The narrative focuses on earnings expansion, margins and a future profit multiple that assumes AI demand stays intense. Want to see which specific growth and profitability assumptions result in a fair value above the latest close?

Result: Fair Value of $400 (UNDERVALUED)

However, you still need to weigh clear risks, including heavy dependence on AI chip demand and ongoing geopolitical tension around Taiwan-based production and trade policy.

Another Angle: Our DCF Model Indicates Overvaluation

That $400 fair value story is only one lens. Our DCF model, which projects future cash flows and discounts them back to today, points to a fair value of $298.96, below the current $370.54 price and indicates that TSM may be overvalued. So which perspective do you consider more relevant right now?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Taiwan Semiconductor Manufacturing for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 54 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With mixed signals on valuation and sentiment running high, this is a good time to look through the numbers yourself and move quickly to shape your own view. You can start with 4 key rewards and 1 important warning sign.

Ready For Your Next Investing Move?

If this TSM story has sharpened your thinking, do not stop here. Put that momentum to work by scanning other ideas that match your style.

• Target quality at a discount by reviewing our 54 high quality undervalued stocks that combine stronger fundamentals with prices that may not fully reflect them yet.
• Prioritize resilience by checking the 87 resilient stocks with low risk scores that score well on stability and financial risk factors.
• Hunt for fresh opportunities by heading to our screener containing 23 high quality undiscovered gems before they land on every other investor's radar.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.