TSMC Is Down, the Iran War Is Rattling Chip Stocks, and That's Exactly Why Long-Term Investors Should Pay Attention
Key Points
Its stock has been negatively affected by geopolitical concerns, but core fundamentals remain strong.
While investors may face short-term energy supply shocks, TSMC’s long-term thesis is intact.
It's well-positioned for multi-year growth driven by massive capex spending and increasing AI adoption.
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Shares of Taiwan Semiconductor Manufacturing (NYSE: TSM) have declined by over 7% in the past month, as geopolitical tensions tied to the Iran conflict raise concerns about global supply chains. Hence, while the company's demand drivers remain intact, its risk perception has clearly shifted.
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Taiwan relies heavily on liquified natural gas (LNG) imports, much of which pass through the Strait of Hormuz. Any disruption in this corridor could increase energy costs and constrain TSMC's chip production. According to geopolitical commentator Shanaka Anslem Perera, Taiwan imports 97% of its energy requirements and holds just 11 days of natural gas reserves (as of March 23, 2026). Rising helium prices can also prove to be a possible bottleneck in advanced chip manufacturing.
Demand remains strong
Despite increasing investor concerns, TSMC's fundamentals remain exceptionally strong. For its 2025's fourth quarter, revenue grew 25.6% year over year to $33.1 billion, while gross margins and operating margins reached 62.3% and 54%, respectively.
Demand for the company's cutting-edge chips is also accelerating. High-performance computing (HPC), which includes artificial intelligence (AI) workloads, accounted for 55% of the fourth-quarter revenues. With AI adoption increasing across enterprise, consumer, and sovereign use cases, the demand for TSMC's cutting-edge chips is coming not only from direct customers, which are chip designers, but also from cloud service providers.
TSMC is also preparing for a multi-year demand cycle. The company is planning for $52 billion to $56 billion in capex in 2026, largely focused on expanding advanced chip manufacturing capacity. The company expects close to 30% revenue growth in 2026, while AI accelerator revenues are estimated to grow in the mid- to high 50s percent annually from 2024 to 2029.
With TSMC accounting for nearly 72% of the global foundry share at the end of 2025, the current share price pullback can be an attractive entry point for long-term investors.
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Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
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