Based on the latest data from August 2025, TSM is trading at $230.87, positioning the stock in the "undervalued" zone below the 1.9x PE multiple boundary of $104.14. This represents a significant undervaluation relative to historical PE ratios, with the stock trading at approximately 2.2x PE based on its position between the 1.9x ($104.14) and 2.7x ($154.24) PE boundaries. The current price level suggests the stock is in the most attractive valuation zone, typically considered a strong buying opportunity for long-term investors. Analyzing the historical trend reveals a dramatic valuation journey over the past five years. TSM experienced substantial PE expansion from 2020 through early 2025, with the stock price climbing from around $53 in early 2020 to peaks above $236 in July 2025, moving through multiple PE zones from undervalued to overvalued territories. The stock reached its highest valuations between late 2024 and mid-2025, trading above the 4.5x PE boundary and approaching the 5.4x PE "warning" zone. However, recent months have shown a significant valuation contraction, with the stock retreating from these elevated levels back into undervalued territory. This pattern suggests either earnings growth has outpaced stock price appreciation or the market has repriced the stock lower, creating a potentially attractive entry point for value-oriented investors. The PE stream boundaries have also expanded over time, indicating growing earnings that support higher absolute price levels even at lower PE multiples.