Taiwan Semi's Earnings Have Us Buying More of These Holdings

* We are using yesterday’s pullback to buy more shares of Marvell and Qualcomm following this morning’s earnings and guidance from Taiwan Semiconductor.

* June-quarter results from TSM were spurred on by a 56.9% year-over-year gain in HPC and an almost 33% jump in smartphone.

* TSM’s guidance reflects ramping demand for AI and high-end smartphones.

* To help fund these trades, we will lock in some hefty gains from our GLD position.

Symbol	Transaction Type	# Shares Traded	Recent Price $	Shares Owned After Trade	% Portfolio
MRVL	Buy	120	69.50	2,630	4.0
QCOM	Buy	55	193.50	945	4.0
GLD	Sell	38	228.00	200	1.0

After you receive this Alert, we will make the following trades:

-- Buy 120 shares of Marvell Technology MRVL at or near $69.50. Following the trade, MRVL shares will account for roughly 4.0% of the portfolio.

-- Buy 55 shares of Qualcomm QCOM at or near $193.50. Following the trade, QCOM shares will make up about 4.0% of the portfolio.

-- Sell 38 shares of SPDR Gold Shares GLD at or near $228. Following the trade, GLD shares will account for around 1.0% of the portfolio.

Chip stocks were hard hit Wednesday but following Thursday morning’s June-quarter earnings report and guidance from semiconductor foundry company Taiwan Semiconductor TSM, we are taking advantage of that pullback. Because their position sizes in the portfolio fell well below the 4% level, we are scooping up more shares of Qualcomm and Marvell. To help fund those moves and to preserve our cash levels, we are taking advantage of the more than 22% move in our SPDR Gold Shares since mid-February to lock in a slice of those gains. This is a modest trim, and one that will allow us to partake in further gains as GLD pushes closer to our price target.

As we make these trades, we are also reiterating our One ratings on Nvidia NVDA, Apple AAPL, and Universal Display OLED because of what we saw in TSM’s results and guidance.

So, What Did We See in TSM's Results?

Based on the company’s recent revenue report for June, we knew its top line for the June quarter was going to be strong, but it was the details and end-market breakdown for the quarter that delivered a positive surprise. Revenue for the quarter rose 32.8%, year over year, with smartphone rising in line with the overall revenue increase, but once again the company’s High Performance Computing segment, the one that houses AI and data center, was the champ. That revenue soared almost 57%, year over year, and 24.7% compared to the March quarter.

In terms of TSM’s outlook for the current quarter, the company said that, “Over the past three months, we have observed strong AI and high-end smartphone-related demand from our customers, as compared to three months ago…” That sequential improvement led management to issue September-quarter guidance that, at the midpoint, calls for revenue to climb 32% year over year (10% sequentially). Based on that top-line figure, management’s comments, and the seasonal upswing in smartphone, it suggests TSM’s HPC and smartphone revenue will deliver similar or better year-over-year growth in the current quarter.

That has the potential to re-ignite interest in these stocks following the declines of the last few days. The next set of catalysts to watch will be capital spending comments from Alphabet GOOGL, Meta META, Amazon AMZN, Microsoft MSFT, and others when they report their June-quarter results in the coming days and weeks. We’ll also look for confirmation when other companies tied to the smartphone market, including Samsung, Skyworks Solutions SWKS, and Qorvo QRVO post quarterly results.

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(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)

At the time of publication, TheStreet Pro Portfolio was long MRVL, QCOM, GLD, NVDA, AAPL, OLED, GOOGL, AMZN and MSFT.