Beneficiary of the CHIPs Act vs Strong AI Chips Demand Beneficiary
This week we will be seeing $ASML Holding(ASML.US$ and $Taiwan Semiconductor(TSM.US$ releasing their earnings reports respectively on 17 April and 18 April.
ASML Q1 Earnings Might Tumble But Second-Half Recovery Expected
ASML is set to report the FQ1'24 earnings on April 17, 2024, with it unknown if it may continue the consecutive earnings beat since 2010, barring once in 2021. But analysts expect ASML earnings to tumble in Q1, but see a second-half recovery.
With the ultimate aim of boosting domestic production of semiconductors, it goes without saying that ASML will be the main beneficiary of the CHIPs Act. This also explains why the management has reported accelerating growth in net bookings in FQ4'23, further aided by the recovering memory market.
ASML stock fell 1.8% to 961.84 last week, right around the 50-day, It now has a flat base with a 1,056.34 buy point.
If we looked closely at how ASML have been trading over the last few days, I would say it is range bound, but investors confidence is also decreasing, this might pose challenge.
Taiwan Semiconductor Earnings Expected To Be Flat
Taiwan Semi earnings are expected to be flat, though the foundry giant reported better-than-expected Q1 sales on 10 April 2024. Taiwan Semi have been benefiting from strong demand for AI chips. TSMC's earnings and capital spending guidance will be key for the industry.
TSM stock rose 0.85% to 142.56 for the week. Shares have been consolidating for a few weeks, but need another week for a proper base. Investors could use the 10 April high of 148.43 as an entry if Taiwan Semi stock rallies on earnings.
If we look at how TSM have been trading over the last few days, we could see range bound trading, but the investors sentiment and strength have been holding steadily.
There might be a chance that TSM could benefitting from China directive to restrict Intel and AMD, the demand for TSM chips might increase as a result.
What To Do This Week
There was expectation that market would rise on Friday with strength from NASDAQ and semi leaders like Nvidia after a strong action on last Thursday (11 April).
But market saw a big retreat instead as anticipation grow of an Iran strike on Israel, and the conflict started over the weekend. Hence while treasury yields drop on Friday, we might see investors going for bonds.
I would think we should still focus on $iShares Semiconductor ETF(SOXX.US$ as semi earnings season coming up, there might be some catalyst driving NASDAQ up as well.
As we can see SOXX experience a drop on last Friday (12 Apr) but the investors demand is still strong, there is no sell off as seen over the last week, this trend could continue in the midst of the conflict as investors might start to shift their focus.
Summary
With 2 semi earnings coming this week, we could expect the focus on the sector again, but we need to remember that Nvidia is the one that could propel or make the big difference for this sector. Now that Intel and AMD stock price bound to suffer as a result of China’s latest directive.
How much can ASML and TSM help the semi sector? I believe I will stay invested and watch the development of the conflict of Iran and Israel as well.
Appreciate if you could share your thoughts in the comment section whether you think semi sector would be affected by the conflict and also Intel and AMD impact from China’s directive?
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Make it Big : Why would China directive to restrict Intel and AMD chips benefits TSM? TSM is manufacturing the chips for companies like Intel. AMD. Apple and Nvidia Can the author explain the view?
nerdbull1669OP Make it Big: hope you understand that TSM not only does manufacturing for Intel and AMD, companies already seek to build their own chips, so reliant of Intel and AMD will reduced, but TSM still manufacture for those customized chips.
Hope this helps to answer your questions!
I am preparing the data on the TSM demand for customized chips.
Tonyco : Hmm idk tsm earnings are gonna be higher than est imo. Nvidia and them are buddies... I will need more info
103587782 Tonyco: Earnings likely beat estimate but not sure if currently earnings will lead to stock price boost, JP Morgan earnings killed the estimate but their stock plunged.