Mr Market in the age of semiconductors 

Thursday morning my phone rings. I am not in the best of moods. England is 10 minutes away from a place in the World Cup finals until it strikes Lionel Messi that he is 10 minutes away from missing it. The call is a client, reminding me that the share prices of two of my favourite stocks, ASML and TSMC, are sliding, despite my breezy optimism about their prospects.

It is a fair concern. And feeling irritable, I decide it is the perfect moment to introduce my client to Benjamin Graham’s old friend: Mr Market.

Graham lived through the trauma of the 1929 crash. His investment partnership lost nearly 70% of its value, forcing him to rebuild client capital painstakingly. That experience shaped his philosophy on the market – focus on fundamentals, not speculation.

In his book, Security Analysis (1934), Graham laid the foundation for value investing, advocating intrinsic value over market sentiment. In The Intelligent Investor (1949), he introduced Mr Market, a manic‑depressive partner who offers to buy or sell shares daily at prices dictated by his moods. Graham’s lesson was timeless: “Mr Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful.”

Warren Buffett, Graham’s most famous student, often said: “By far the best book on investing ever written is The Intelligent Investor.” He singled out chapter eight – the Mr Market parable – as the most important lesson he ever learnt.

Manic-depressive swings

Buffett modernised Graham’s wisdom in practice. He used volatility to his advantage, buying when pessimism drove prices below intrinsic value, and ignoring euphoric valuations. His early purchase of American Express after the 1960s “salad oil scandal” is a classic example. While Mr Market panicked, Buffett bought at depressed prices and profited enormously.

Buffett’s success at Berkshire Hathaway was built on this discipline. He showed that patience, conviction and a focus on fundamentals could triumph over Mr Market’s manic‑depressive swings.

Fast-forward to 2026. Mr Market is alive and well, dressed in chinos and white sneakers, armed with a master’s degree from an Ivy League school, a weekend retreat in the Hamptons, and algorithmically articulate. He still shows up each day, moody as ever, offering to buy or sell stocks with a latte in one hand and a trading app in the other.

Last week, ASML, the Netherlands semiconductor equipment maker, and TSMC, the Taiwanese chip manufacturer, reported exceptional numbers. Both exceeded sales, revenues and margin expectations.

ASML CEO Christophe Fouquet commented: “We see AI-related investments driving demand for advanced logic and memory chips. We are expanding product capacity by 30% to meet this demand.”

TSMC CFO Wendell Huang reported: “Demand for our chips remains strong. We are raising capex to $64bn and committing $100bn to our Arizona factory.”

Analysts raised the one-year target prices for both companies significantly.

By any rational measure, these are outstanding businesses with strong futures. Yet Mr Market, in his latest mood, marked them down. Since the beginning of the month, ASML has shares have fallen about 10.5%, TSMC 16.5%.

The media amplified Mr Market’s petulance, warning of a “rocky patch” for the SOXX (semiconductor) index despite it being up 83% year to date when the results were released. Commentators acknowledged extreme earnings growth, but questioned how long it could continue. Doubts were raised about AI infrastructure returns and whether elevated price targets were more momentum than reliable forecasts.

The SOXX paradox

These voices echo Mr Market’s scepticism, even when fundamentals are strong.

Hedge funds embody Mr Market’s inconsistencies. Brokers reported that funds sold semiconductors for four straight weeks, trimming crowded winners. Yet others snapped up semiconductor ETFs at the fastest pace in three and a half years, betting the selloff had “run its course”.

Mr Market, in other words, is not just moody. He is opportunistic, contradictory and self‑interested.

Here lies the paradox. Companies and analysts remain bullish. Management is investing billions, while analysts are raising targets, implying double‑digit gains. The media remains sceptical, warning of bubbles and valuation traps. Hedge funds are conflicted, selling into strength, then buying the dip. Mr Market stays moody, reflecting fears about sustainability and valuation.

I’m not sure my client grasped the absurdity of my thesis. I ended the call musing that Graham’s Mr Market is the perfect metaphor. Companies and analysts are optimistic. Mr Market is cautious. He may be fickle, but he remains our partner. His moods frustrate, yet they also create opportunity. In stock markets today, as in Graham’s 1940s, patience is still the investor’s greatest ally.

Buffett carried Graham’s wisdom forward, showing that patience and discipline could build Berkshire Hathaway into one of the world’s greatest investment stories. Today, ASML and TSMC are vivid case studies of Graham’s allegory. When fundamentals and forecasts align but sentiment diverges, that divergence is where opportunity lies.

ALSO READ:

• Me and Warren B
• Are today’s ‘safest’ equity bets tomorrow’s risks?
• Put everything on black (or AI, or gold)

_{Top image collage: Rawpixel; Currency.}