Taiwan Semiconductor's Results Are a Clear Positve for Qualcomm and Marvell
This also points to Apple's recent guidance being on the conservative side.
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* Strong October revenue growth at Taiwan Semiconductor supports our long positions in Qualcomm and Marvell as well as Applied Materials
* Apple is a known TSM partner, and its October revenue suggests Apple's recent guidance leans conservative
* Near-term uncertainty and pronounced moves in AAPL, QCOM, MRVL shares have us waiting for a pullback
Taiwan Semiconductor TSM reported a strong increase in its October revenue - up 35% month over month and ~16% year over year - a clear positive for Action Alerts PLUS chip companies Qualcomm QCOM and Marvell MRVL .
TSM is also a known partner of Apple AAPL , and its results point to Apple's recent guidance being on the conservative side. We should see TSM's results lift these shares this morning but following our comments this morning and their pronounced moves since October 25-26, we would not chase the shares here.
With the market overbought as are QCOM shares, and uncertainties we discussed in our opening comments this morning, we would rather use the support in TSM's October revenue to buy the shares at lower levels or an October CPI report that increases the odds of a Fed rate hike being off the table.
That strong revenue growth at TSM, which supports the upturn in the smartphone market, rebound in the PC market, and continued demand for AI, data center, and automotive chips, suggests its chip capacity may be tightening quicker than expected. This will foster thoughts that chip equipment spending could be stronger than expected in the coming quarter, giving some lift to our shares of Applied Materials AMAT ahead of its quarterly results out next week.
Action Alerts PLUS is long QCOM, MRVL, APPL, AMAT.