Tech Stocks Soar as Chipmaker TSMC’s Upbeat Outlook Eases AI Demand Worries
The US stock market is off to a strong start today, thanks to a surge in tech stocks led by Taiwan Semiconductor Manufacturing Company (TSMC). The contract chipmaker’s impressive quarterly profit and revised revenue forecast have alleviated concerns about artificial intelligence (AI) chip demand, sending its shares soaring 8% in premarket trading.
TSMC’s Earnings Beat Expectations
TSMC’s quarterly profit jumped 54%, exceeding Wall Street estimates and prompting the company to raise its revenue growth forecast for 2024. This positive outlook has reassured investors who were spooked by ASML’s downbeat sales forecast earlier this week. As a result, TSMC’s US-listed shares are poised to cross a $1 trillion market valuation, a significant milestone.
Ripple Effect on Chip Stocks
The chipmaker’s upbeat forecast has had a ripple effect on other chip stocks, with Arm, Broadcom, and Nvidia all experiencing a rally. This is a welcome respite for the sector, which had been reeling from fears of further US trade restrictions and a gloomy report from semiconductor equipment manufacturer ASML.
Retail Sales and Jobless Claims Data Boost Economy
On the data front, retail sales jumped 0.4%, surpassing expectations and indicating a potential acceleration of the economy. Weekly jobless claims also came in lower than expected, at 241,000. These positive numbers have fueled hopes that the economy is reaccelerating, which could influence the Federal Reserve’s interest rate decision in November.
Big Tech Earnings in Focus
With big banks having reported stellar earnings, the focus now shifts to Big Tech companies. Netflix is set to report its earnings after the bell, with investors eagerly awaiting news on price hikes that could potentially lift the stock. The next batch of earnings will be closely watched, as investors seek to wipe away the disappointments of the last quarter.
Market Watch
As the market continues to react to TSMC’s earnings and the positive data, investors will be keeping a close eye on the Federal Reserve’s next move. Will the central bank hold off on cutting interest rates in November? The answer remains to be seen, but for now, the market is basking in the glow of a strong start to the day.
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