TSMC stock is bearish at a key zone after record earnings. Has the stock hit the bottom?

Taiwan Semiconductor Manufacturing (TAI:2330) has endured the difficult year 2022. At the current trading of $98.36, the stock is trading at a significant discount from the highs of $145 reached on January 13, 2022.

A general decline in tech stocks and Covid-19 lockdowns in China have dampened consumer demand and hit supply chains. Consequently, TSMC’s decline has been due to market dynamics rather than the company’s fundamentals.

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At the company level, TSMC sees a strong chip demand ahead. It projects revenue of between US$17.6 billion and $18.2 billion in the second quarter of 2022. This is higher than a record $17.05 billion in revenue in the first quarter of 2022.

However, despite the boosted sales projections, TSM closed down 3.09% on April 14 in New York, the date of the earnings. The decline showed that investors had already priced the stock to a record quarter. However, expectations of dampened global sentiment prompted caution among investors.

TSMC stock fails to excite despite strong earnings

Technically, TSM is trading in TSM closed down 3.09% after reporting record revenues in Q1 2022.a support zone of around $98. The stock is increasingly bearish and could find the bottom of the support at $96. We cannot rule out further drop as an RSI reading of $38 shows the stock is yet to hit oversold levels. With no immediate or short-term catalyst for stock appreciation except the earnings result, TSM could take longer to go higher.

Concluding thoughts

Strong chip demand and robust earnings make TSM a good stock. However, investors may have to wait to pick a lower bottom as the stock remains bearish due to weak global sentiment. The stock could find support at $96 or slide lower.

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