Billionaire investor Warren Buffett loaded up on U.S. shares of Taiwan Semiconductor Manufacturing in the third quarter, betting that TSM stock had bottomed.
The news sent TSM stock surging on Tuesday. On the stock market today, TSM stock popped 10.5% higher to close at 80.46.
TSM stock hit an all-time high of 145 on Jan. 13 before crashing amid a sell-off in semiconductor stocks. U.S. shares of Taiwan Semiconductor dropped to a two-year low of 59.43 on Nov. 3 before rebounding.
Warren Buffett's Berkshire Hathaway disclosed late Monday that it bought about 60 million American depositary receipts in Taiwan Semi in the third quarter. That stake in TSM stock cost Berkshire about $5 billion.
TSM Stock Has So-So Composite Rating
Buffett's TSM stock buy is significant because it is his first investment in the semiconductor sector, Jordan Klein, managing director for tech, media and telecom sector trading at Mizuho Securities, said in a note to clients Tuesday.
"TSM is as high quality as it gets and defines 'long-term buy and hold,'" Klein said.
Taiwan Semiconductor is the world's top chip foundry. It makes chips for fabless semiconductor firms including AMD, Nvidia and Qualcomm. It also is the exclusive supplier of Apple's custom chips.
TSM stock ranks No. 13 out of 32 stocks in IBD's semiconductor manufacturing industry group, according to IBD Stock Checkup. It has a mediocre IBD Composite Rating of 64 out of 99.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better, according to IBD trading guidelines.
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