What Happened?
A number of stocks jumped in the afternoon session after industry bellwether Taiwan Semiconductor Manufacturing Co. (TSMC) reported a substantial 58% jump in quarterly profit and forecasted strong future sales, fueled by booming demand for artificial intelligence (AI).
As the world's largest contract chipmaker and a key supplier for tech giants like Apple and Nvidia, TSMC's performance is often seen as a barometer for the entire industry. The company posted a record net profit of $18.1 billion for the first quarter, a 58.3% increase from the previous year. Looking ahead, TSMC attributed its optimistic outlook to the continued surge in demand for advanced computing chips required for AI applications. This robust report signals underlying strength and vigorous demand across the global chip market, lifting sentiment for other semiconductor companies.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Semiconductor Manufacturing company Semtech (NASDAQ: SMTC) jumped 6.9%. Is now the time to buy Semtech? Access our full analysis report here, it’s free.
- Semiconductor Manufacturing company Amkor (NASDAQ: AMKR) jumped 4.7%. Is now the time to buy Amkor? Access our full analysis report here, it’s free.
Zooming In On Semtech (SMTC)
Semtech’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock gained 7% on the news that the VanEck Semiconductor ETF jumped nearly 5% in response to the de-escalation of the U.S.-Iran conflict.
The sector rallied specifically because semiconductors were highly vulnerable to the supply chain disruptions that occurred during the war. The reopening of the Strait of Hormuz is a critical victory for the industry, as the waterway is essential for the transit of noble gases and materials used in chip fabrication.
Semtech is up 33.5% since the beginning of the year, and at $100.49 per share, has set a new 52-week high. Investors who bought $1,000 worth of Semtech’s shares 5 years ago would now be looking at an investment worth $1,426.
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