On Thursday, July 15, Taiwan Semiconductor Manufacturing (TSM), the world’s leading chip foundry, reported earnings of 93 cents a share for the second quarter, up 18% year over year. That was inline with analyst estimates. Sales rose 28%. The company raised its revenue guidance for the third quarter to a range of $14.6 billion to $14.9 billion. The midpoint of that range, $14.75 billion, was above the Wall Street consensus estimate of $14.57 billion. Sales in the third quarter of 2020 are $12.4 billion.Taiwan Semiconductor said that it now expects sales to grow more than 20% this year, an increase from the 20% target announced earlier in the year. For 2020-2025, the company raised its revenue forecast to a compound annual growth rate of 15% from a previous target of 10% to 15%. But the stock dropped 5.5% on July 15 and fell another 1.52% on Friday, July 16. Why?
If you’re building a portfolio and want e-commerce exposure, you buy Amazon (AMZN). For smartphones, you buy a stake in Apple (AAPL). For electric cars, it’s Tesla (TSLA). There’s a small group of stocks that are “must own” stocks for any growth portfolio because they encapsulate a key growth trend. I’d now add Nvidia to the list.
Remember way back at the beginning of last week? That is before the Federal Reserve signaled on Wednesday that more of the members of its Open Market Committee were thinking about raising interest rates sooner than previously expected. Re-opening stocks, value stocks, and cyclical stocks led the market. The small cap Russell 2000 was the best performing of the major indexes. Well, they’re back
Applied Materials “stomps” Wall Street earnings projections: I’d use any post-earnings weakness to buy
The chip shortage that has hurt technology companies such as Apple (AAPL) and hammered auto producers continues to pay dividends to Applied Materials (AMAT), the dominant manufacturer of equipment used to make semiconductors. Yesterday, May 20, after the market close in New York, Applied Materials reported fiscal second-quarter adjusted earnings of $1.63 a share against 89 cents a share in the second quarter of the last fiscal year. Revenue rose to $5.58 billion from $3.96 billion in the second quarter of fiscal 2020.
Call it the Apple problem although it isn’t limited to Apple: Skyworks post-earnings tumble is example of the market’s huge expectations worry
After the close yesterday, April 29, Skyworks Solutions (SWKS), a key Apple supplier and a maker of radio frequency chips for smartphones and WiFi networking equipment, reported earnings of $2.37 a share on sales of $1.17 billion for quarter that closed on April 2 2021. That beat–slightly–Wall Street projections for earnings of $2.35 a share and sales of $1.15 billion. Year over year Skyworks earnings climbed 77% and sales rose by 53%. And what happened to the stock in after-hours trading? It got punished. Shares dropped to $183.37, a loss of $14.49 a share from the day’s close at $197.86. That’s a loss of 7.32%. In a market driven by expectations for constantly higher growth, I think you can see the problem.
At its “Spring Loaded” event tomorrow, April 20, Apple (AAPL) is expected to announce changes to its 11-inch and 12.9-inch iPad Pro models. Analysts expect that both models will include Apple’s new A14X chip and that the high-end iPad will come with a mini-LED display. In a research note Wedbush analyst Dan Ives wrote that a mini-LED display, “will be a game changer around color performance, dimming capabilities, and high contrast capabilities for the consumer.” Apple’s iPad segment faces a tough comparisons for the second half of the 2021 fiscal year, as work-from-home and at-home education drove double-digit iPad growth in the second half last year.
Nvidia jumps 5.62% today on upgrade to revenue forecast and news of its first microprocessor for servers
Nvidia (NVDA) announced its first microprocessor for the server market today, April 12. Right now Intel (INTC) owns around 90% of the market for server processors. And the company also reported that first-quarter revenue “is tracking” above its previous forecast. Revenue in the quarter ending in April is now expected to be higher than $5.3 the billion, which Nvidia projected on February 24. Nvidia shares were up 5.62% today on the news
Apparently everybody decided today that tomorrow’s March jobs report will show accelerating economic growth
With the financial markets closed tomorrow for Good Friday, traders and investors jumped in to buy today ahead of what is expected to be a jobs report tomorrow morning showing unemployment dropping to 6.0% (by the official measure) from 6.2% in February. The Standard & Poor’s 500 closed up 1.18%. The Dow Jones Industrial average ended 0.52% higher. The NASDAQ Composite finished higher by 1.76%. And the small cap Russell 2000 gained 1.50% on the day.
On second thought, financial markets decide they really didn’t like yesterday’s news from the Federal Reserve
After not moving very much yesterday on the actual news from the Federal Reserve-the Standard & Poor’s 500 finished up 0.29% and the NASDSQ Composite closed higher by 0.40%, today, March 18, markets decided they really didn’t like the Fed’s stance on inflation, interest rates, and bond yields.
A day after Fed chair Jerome Powell said the Fed wasn’t much concerned about either the projects for higher inflation or the rise in Treasury yields, the yield on the 10-year Treasury spiked to 1.71% at the close. (It was at 1.74% as 1 p.m. in New York.) The closing yield amounted to a jump of 7 basis points in the yield on the benchmark Treasury issue. The yield on the 10-year Treasury is now up an astonishing 42 basis points in a month. And as has been the case in 2021 and as you might expect, stocks sold off with high multiple, high momentum technology shares taking the worst beating.
Today, March 15, shares of Marvell Technology Group (MRVL) closed at $48.08, slightly above my target price of $48 a share. In this very volatile market for technology stocks, I’m going to take my almost 20% profit (19.90% to be exact) and sell these shares out of my Jubak Picks Portfolio tomorrow, March 16. The profit came in less than two weeks from my March 6 buy.
While the NASDAQ Composite and Standard & Poor’s 500 were flirting with a correction on March 4, Marvell Technology Group (MRVL) has moved into its own better than 10% drop in just the last week. The stock is down 13.89% in the last week as of the close yesterday March 4 at $40.10. The stock is now down 15.66% for 2021 to date. I’m going to use this correction to add the shares to my Jubak Picks Portfolio on March 5 with a target price of $48 a share. The stock pays a tiny 0.60% dividend.
Given how strong the earnings beat was for the last quarter and how big the increase in guidance was for the next quarter from Applied Materials (AMAT) after the market close last night (February 18) today’s stock gain of 5.19% was actually rather modest.