TECH - Trump Trade May Reverse As Probability Of Biden Backing Out Increases – Watch AI Semiconductors | Benzinga
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Watch Trump Trade
Please click here for an enlarged chart of Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM).
Note the following:
- This article is about the big picture, not an individual stock. The chart of TSM stock is being used to illustrate the point.
- TSM is important because it is the largest semiconductor foundry in the world. More importantly, TSM manufactures nearly all of the advanced AI chips. NVIDIA Corp (NASDAQ: NVDA) GPUs are manufactured by TSM.
- The chart shows that the Trump trade caused the upward sloping trendline to be broken.
- The chart shows a gap down on Trump’s comments about Taiwan and China.
- The chart shows that volume was high as the stock fell on Trump’s comments. This indicates that the Trump trade has conviction.
- The chart shows that TSM is attempting a bounce after reporting excellent earnings.
- TSM reported earnings better than consensus and whisper numbers. Here are the details:
- Over 50% of revenues are coming from AI and advanced chips.
- Q2 earnings came at $1.48 vs. $1.41 consensus.
- Revenues grew 34.6% year-over-year. Revenues came at $20.82B vs. $20.33B consensus.
- The company guides Q3 revenue of $22.4B - $23.2B vs. $22.64B consensus.
- The company guides gross margin in the range of 53.5% - 55.5%.
- The company guides operating margin between 42.5% - 44.5%.
- RSI on the chart shows that it is not yet oversold. This indicates that it is too early to step in to buy, even for those who are oblivious to the China risk.
- One result of the Trump trade gaining popularity is that yesterday was the worst day for semiconductors since the fall in semiconductors in March 2020 due to COVID.
- The Trump trade is not all negative. As we have previously shared with you, the Trump trade is driving money into small caps and bank stocks. Of note are extremely positive money flows in iShares Russell 2000 ETF (NYSEARCA: IWM), SPDR S&P Bank ETF (KBE), and SPDR S&P Regional Banking ETF (NYSEARCA: KRE). As full disclosure, IWM and KBE are in The Arora Report's ZYX Allocation Model Portfolio.
- It is worth a reminder that The Arora Report is politically agnostic. Our sole job is to help investors extract the maximum amount of money ...