Several institutional investors have been scaling back their positions in Taiwan Semiconductor Manufacturing Company (TSMC) as the stock trades near its 52-week peak. This activity coincides with the company’s recent formal dividend filing, raising questions about the motivations behind the selling by major market players.
Stellar Financial Performance Supports Valuation
TSMC concluded its 2025 fiscal year with unprecedented results, reinforcing its dominant market position. The chipmaker reported record revenue of $122.42 billion and a net profit of $55.22 billion, achieving a gross margin of 62.3%. A primary growth engine has been the High-Performance Computing segment, which now contributes 58% of total revenue, fueled by relentless demand for artificial intelligence processors.
The company’s forward-looking projections remain robust. TSMC forecasts that its AI-related chip revenue will grow at a compound annual rate of approximately 60% through 2029. To support this anticipated expansion, management has significantly increased its capital expenditure budget. Planned investments for 2026 are set between $52 billion and $56 billion, marking a rise of roughly 30% compared to the previous year.
Institutional Selling Detailed in Recent Filings
Recent 13F regulatory disclosures reveal notable selling activity from key funds. MIG Capital divested 40,384 shares of the semiconductor giant. In a more dramatic reduction, Transce3nd LLC sold 1,888 shares, slashing its holding by 94%. The firm now retains a position of just 121 shares, valued at approximately $34,000.
These transactions were executed while TSMC’s share price hovered close to its annual high. While the company’s long-term growth narrative remains compelling, the moves suggest some institutional investors are questioning whether the current valuation fully reflects future potential, prompting them to lock in gains.
Dividend Adjustment Reflects Standard Accounting
On March 2, 2026, TSMC submitted a formal notification regarding a minor adjustment to its cash dividend. The approved payout for the third quarter of 2025 was precisely set at NT$6.00003573 per share. This technical revision represents a routine normalization of outstanding shares following the reclamation of certain share premiums and is not indicative of a strategic shift in capital allocation policy.
Should investors sell immediately? Or is it worth buying TSMC?
The board had originally authorized a total distribution of NT$155.6 billion, or NT$6.00 per share, on November 11, 2025. The payment is scheduled to be disbursed on April 9, 2026, as planned. The precision of this adjustment highlights TSMC’s consistent and meticulous approach to capital management.
Geopolitical Considerations Linger as a Risk Factor
Despite operational excellence, a structural risk continues to shadow the investment thesis. Taiwan’s pivotal role in the global semiconductor supply chain renders TSMC inherently susceptible to geopolitical tensions. Potential export restrictions on advanced manufacturing technologies could delay the company’s revenue growth from its international fabrication facilities, such as those under construction in the United States.
Institutional investors with substantial exposure to TSMC likely weigh this persistent uncertainty in their portfolio decisions. This geopolitical overhang may offer a partial explanation for the recent profit-taking near all-time highs.
Accelerated Expansion in the United States
In a strategic move to diversify its manufacturing footprint, TSMC is accelerating the timeline for its second fabrication plant in Arizona. Production using advanced 3-nanometer technology is now expected to commence in 2027, a year earlier than the previously announced target of 2028.
Upcoming Earnings as a Key Catalyst
The market’s next major focal point will be TSMC’s quarterly results, scheduled for release on April 16, 2026. Analysts will scrutinize the year-over-year revenue trajectory and seek further details on the execution of the hefty capital investment plans. A critical question will be whether the first-quarter figures can substantiate the stock’s premium valuation or if the report will trigger another wave of profit-taking by investors.
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