Boosting Price Targets for 3 Stocks After Taiwan Semi's Monster May Revenue

* TSM’s May revenue surged 20% year over year and is up 44% quarter to date.

* The underlying strength in AI and data center plus the improving smartphone market has us boosting our price targets for Nvidia, Qualcomm, and Apple.

* Reminder: Nvidia’s 10-for-1 stock split occurs today.

One of the non-economic reports we’ve been waiting for, the May revenue report from Taiwan Semiconductor TSM, has been published and it is bullish for our positions in Nvidia NVDA, Marvell MRVL, Apple AAPL, Qualcomm QCOM, and Universal Display OLED. May revenue for TSM soared 30% higher compared to year-ago levels reflecting strong demand for AI and data center chips as well as the improving smartphone landscape.

Some may quibble about the 3% sequential drop in the May revenue but to us, the more meaningful way to look at it is the company’s combined April and May revenue, which was up 44% vs. last year. And if we really wanted to math out, the combined April-May revenue for this year is up 17% compared to the first two months of Q1 2024.

No matter how you slice it, TSM is showcasing the strength in key end markets for several of our holdings. When we look at the consensus revenue forecast of $19.96 billion for TSM’s current quarter vs. the $15.68 billion posted in the year-ago quarter, odds are high we’ll see those forecasts get lifted today and early next week, giving an added lift to those five portfolio holdings.

That strength is leading us to fine-tune some of our position price targets.

We'll increase our NVDA price target to $1,320 from $1,250, but let’s remember we will see Nvidia’s 10-for-1 stock split today, which means our adjusted price target will be $132. It also means the number of shares in our position will be adjusted to 1,510 from 151, but the overall position size of 4.18% of the portfolio’s assets as of last night’s market close will be unchanged.

We will also lift our QCOM price target to $240 from $230.

Finally, we we will boost our AAPL target to $230 from $220. We are making this change ahead of Apple’s WWDC event next week with Monday’s keynote showcasing what’s next for its software platforms. A number of announcements are expected, but the focal point will be on Apple’s AI efforts. Based on what is revealed, we may revisit our price target yet again.

For now, we’ll maintain our existing price targets of $95 for Marvell and $225 for Universal Display, but we will reiterate our One ratings for both.

Jobs Report

Now we wait for the May Employment Report out at 8:30 AM ET. Although we expect a softer-than-expected jobs number, as we discussed yesterday, we expect the year-over-year average hourly earnings figure will be a focal point for the market. Should it come in hotter than the market forecast of 3.9%, we could see the market come under some pressure. If it surprises to the downside, today’s TSM news should lift these five holdings and the market. 

At the time of publictaion, TheStreet Pro Portfolio was long NVDA, AAPL, QCOM, MRVL and OLED.