TSMC Earnings Call Irrelevant!? Global Deleveraging Triggers Panic Selling – Are We Hitting Rock Bottom?

JPMorgan conducted a 20-year statistical analysis showing that if investors stayed fully invested in the S&P 500 index, they would have achieved an annualized return of 9.7%. However, missing just the 10 best-performing days during that period would reduce the annualized return to 5.5%.

Notably, 7 out of those 10 best days occurred within two weeks of the 10 worst-performing days, and 6 of those 7 days happened the day immediately after one of the worst days. This suggests that the darkest moment often precedes the dawn. JPMorgan’s data indicates that 'exiting the market at this time carries the highest cost.'

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This current wave of deleveraging is a global correction. In Japan, Kioxia Holdings has fallen 50% from its peak, wiping out 30 trillion yen (nearly 6 trillion New Taiwan dollars) in market value. Taiyo Yuden has dropped nearly 60%, losing 1.7 trillion yen (about 350 billion New Taiwan dollars) in market capitalization. Tokyo Electron has declined approximately 20% from its high, erasing around 8.6 trillion yen (nearly 1.7 trillion New Taiwan dollars) in value.

Despite strong financial reports and raised guidance from both ASML and TSMC, the market has clearly rejected the positive news. Deleveraging and concerns over the sustainability of the AI industry are driving market sentiment. Whether it’s large institutions, professional investment funds triggering stop-loss orders, or margin calls forcing leveraged investors to exit, this wave of panic-driven selling—often referred to as a 'crowded trade unwinding'—has intensified selling pressure. On last Friday, the selling pressure worsened, with both the Taiwan stock market and the Nikkei 225 index breaking below their quarterly moving averages.

Market panic often leads to selling waves that mark either a bottom or a short-term low. Such forced adjustments can accelerate market correction and bring forward a bottoming process.

Life is a marathon, and so is investing. Investors should adjust their mindset and prepare for the future. Opportunities favor those who are prepared. Until clear signs of reversal emerge in the AI industry, investors should watch for pullback buying opportunities in high-performing AI stocks. TSMC continues to maintain high revenue growth and has increased its capital expenditure at customers’ request. With long-term revenue and profit growth expected, both TSMC and its supply chain remain attractive investment targets during market pullbacks. More conservative investors may consider ETFs with high TSMC exposure, such as 0050 and 0052.

Top-performing stocks in TSMC’s supply chain include:

TSMC Supply Chain: TSMC (2330-TW), Zhongsha (1560-TW), Shengyang Semiconductor (8028-TW), Hsiang Ming (8091-TW), Fan Hsuan (6196-TW), Zhi Sheng (2467-TW), Mega Link (6944-TW), Kingboard (3413-TW), Yashine (6139-TW), Ch崇越 (5434-TW), Hualix (3010-TW)

We once again remind investors: market volatility has been extremely high recently. In trading, it is essential to reduce leverage, maintain some cash reserves, lower risk exposure, and selectively enter high-quality, fundamentally sound stocks on pullbacks. In stock selection, in addition to TSMC’s supply chain, investors should also monitor other AI high-performing stocks that have already seen significant declines. For more insights, join our LINE@.

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Article Source: Moore Investment Consulting – Analyst Jason Yeh

Our company has no improper financial interest in the securities we recommend or analyze. Past performance does not guarantee future profits. Investors should make independent judgments, conduct careful evaluations, and assume investment risks on their own.