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- 📈 TSMC's AI Chip Bonanza
📈 TSMC's AI Chip Bonanza
Apple has its worst day since August, Rio Tinto and Glencore look to merge, Snap shares drop as complaint goes to DOJ, CC Capital raises Insignia offer, TSMC hits 57% profit surge
Evelio Silvera
January 17, 2025
Good morning.
⚡ The Fast Five → Apple has its worst day since August, Rio Tinto and Glencore look to merge, Snap shares drop as complaint goes to DOJ, CC Capital raises Insignia offer, TSMC hits 57% profit surge
🔎 Market Trends → Wall Street slips after rally as earnings, data eyed; US Futures Steady After Downbeat Session
And now…
⏱️ Your 5-minute briefing for Friday, January 17, 2025:
MARKET BRIEF
Before the Open
As of market close 01/16/2025.
Pre-Market
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Fear & Greed
Markets in Review
Markets Dip as Retail Sales and Earnings Signal Mixed Momentum
The Nasdaq slipped 0.9% to 19,338.3, while the Dow and S&P 500 each fell 0.2%, closing at 43,153.1 and 5,937.3, respectively. Technology led declines, while utilities posted modest gains.
The Big Picture:
Markets pulled back Thursday as retail sales data signaled slower-than-expected growth, though consumer strength remains a backbone of the economy. The Federal Reserve appears poised to hold its policy rate steady at the end of the month, with inflation showing steady progress and tariffs adding uncertainty to the broader outlook.
Meanwhile, corporate earnings provided a mixed picture. Strong results from investment banks showcased deal-making resilience, while disappointing revenue figures weighed on healthcare giant UnitedHealth Group (UNH).
Oil fell 1.8% to $78.63/barrel, reflecting softer demand expectations. Gold rose 1% to $2,745.20/oz, while silver gained 0.2%, as investors leaned into safe-haven assets.
Market Movers:
DexCom (DXCM): Jumped +5.5%, leading the S&P 500, after Baird upgraded the stock to outperform, citing strong growth potential in its diabetes monitoring technology.
Morgan Stanley (MS): Gained +4%, on higher-than-expected Q4 earnings driven by IPO and deal activity, underscoring the strength of its investment banking segment.
UnitedHealth Group (UNH): Fell -6%, the worst performer on the S&P 500 and Dow, as revenue missed expectations despite annual profit growth.
What They’re Saying:
"The consumer's resilience has been impressive, but slower retail sales growth gives the Fed justification to remain cautious in cutting rates further," noted BMO.
WHAT WE’RE WATCHING
Events
There are no events scheduled for today.
Earnings Reports
Today: Truist Bank, Huntington Bank, Regions Bank, Citizens Bank, SLB, Fastenal, State Street
Monday: Grupo Aval
MARKET BRIEF
Leading News
AI Chip Bonanza Propels TSMC to Record Profits
Why it matters:
The world's largest chipmaker just showed us the AI gold rush isn't just hype — it's driving real profits and transforming the semiconductor industry's economics.
Zoom Out:
The tea leaves from Taiwan are telling us something remarkable: TSMC's (TSM) profits surged 57% to an all-time high of NT$374.7 billion ($26.4 billion), handily beating Wall Street's expectations. But this isn't your garden-variety earnings beat.
What we're witnessing is the dawn of what behavioral economists might call a "productive mania" — unlike the crypto bubble or dot-com boom, this surge is backed by tangible demand from companies desperately seeking processing power for AI applications.
Key Insights:
The AI Accelerator Effect: TSMC's high-performance computing segment, which includes AI chips, now accounts for 53% of revenue. More telling? AI accelerator revenue tripled in 2024 and is forecast to double again in 2025 — suggesting we're still in the early innings of this game.
The Apple Factor: While everyone's focused on AI, TSMC's diversified customer base (including Apple's iPhone chips) provides a steady foundation beneath the AI growth rocket.
Storm Clouds on the Horizon: Trade tensions with China and potential Trump tariffs loom large. But unlike previous tech cycles, this boom is driven by enterprise spending rather than consumer whims.
Market Pulse:
"Even after more than tripling in 2024, we forecast our revenue from AI accelerators to double in 2025" — Wendell Huang, TSMC CFO, suggesting the AI chip shortage isn't ending anytime soon.
Bull’s Take:
Smart money should view TSMC and its ecosystem — including equipment makers like ASML — as picks-and-shovels plays on the AI revolution. Think of it as buying railroads during the industrial revolution: regardless of which AI companies win, they'll all need chips. While semiconductor stocks aren't immune to market volatility, the structural demand for AI computing power makes this cycle different from previous tech booms. Consider using market dips to build positions in quality semiconductor names.
Headlines
Rio Tinto and Glencore held talks about combining their businesses (link)
Novo Holdings looks to double Catalent size with eye on Trump US manufacturing focus (link)
Toyota’s truck division Hino to pay $1.6 billion as part of emissions scandal (link)
Snap shares drop as FTC refers MyAI chatbot complaint to the DOJ (link)
CC Capital Raises Insignia Offer, Tops Bain’s Takeover Bid (link)
Apple has worst day since August following reports of China, AI struggles (link)
CRYPTO
Fear & Greed
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On the Socials
*Hat-tip to dougboneparth