Welcome to this week’s edition of top stock market highlights.
TSMC (NYSE: TSM)
TSMC released a sales report for September 2024 that beat estimates.
The world’s largest chipmaker reported revenue of NT$251.87 billion, up 39% year on year from NT$180.4 billion a year ago.
For the quarter ending 30 September, sales came in at NT$759.7 billion, beating analysts’ estimates for sales of NT$748 billion.
TSMC, which manufactures chips for leading technology companies such as Nvidia (NASDAQ: NVDA) and Apple (NASDAQ: AAPL), announced numbers that reassured investors of strong demand for artificial intelligence (AI) hardware.
Year-to-date, sales hit NT$2 trillion, up nearly 32% year on year from the previous year’s NT$1.5 trillion.
TSMC’s shares crossed the US$1 trillion mark in July, a feat achieved by only a handful of companies.
Back then, the company also raised its outlook for 2024’s revenue growth, lending credence to the belief that AI spending will remain robust despite ongoing US-China tensions.
TSMC generates more than 50% of its revenue from high-performance computing, which is driven by AI demand.
It is also the sole manufacturer for Apple’s iPhone processor, though soft demand for the mobile device could crimp TSMC’s sales on this front.
Still, the slack should be picked up by companies such as Meta Platforms (NASDAQ: META), Microsoft (NASDAQ: MSFT) and Baidu Inc (SEHK: 9888) which continue to splurge on AI infrastructure.
Meanwhile, TSMC and Amkor Technology (NASDAQ: AMKR), a semiconductor product packaging and test services provider, signed a memorandum of understanding to bring advanced packaging and test capabilities to Arizona to help expand the region’s semiconductor ecosystem.
People’s Bank of China
The People’s Bank of China (PBOC) set up a swap facility that provides liquidity to institutional investors to buy stocks.
China’s central bank hopes that this move will spur eligible securities firms, funds, and insurers to start buying highly-liquid assets such as stocks, government bonds, and central bank bills.
This tool is worth around RMB 500 billion and may be expanded in the future, and is part of a raft of measures announced earlier that form part of a stimulus package to boost the country’s economy.
These funds can only be used to invest in the stock market, according to the PBOC.
Collateral can include bonds, stock ETFs, or other assets.
The fiscal policy announcement ignited a sharp rally that pushed shares 30% higher.
Hong Kong, however, later saw its largest one-day fall (-9.4%) since the Global Financial Crisis after the National Development and Reform Commission released an announcement that did not involve major investments.
Investors are now keenly awaiting a press briefing to be held on Saturday (12 October) by Finance Minister Lan Fo’an to hear details of further measures to boost government borrowing and spending to boost growth.
China is still targeting a 5% economic expansion, though this target seems increasingly out of reach as the world’s second-largest economy slows and consumer sentiment turns cautious.
Alphabet (NASDAQ: GOOGL)
Alphabet, which owns search engine Google and video-sharing website YouTube, may be at risk of getting broken up.
The US Justice Department is thinking of asking a federal judge to force Alphabet to sell off parts of its business as part of an antitrust lawsuit.
Antitrust advocates are contemplating a breakup of one of the world’s largest technology companies to reduce Google’s dominance in search.
The Justice Department may go one step further and consider “structural and behavioural remedies” to prevent products such as Chrome, Google Play, and Android from passing on advantages to Google Search.
The Department’s 32-page proposal lays out potential options for the judge to consider and the agency will follow-up with a more comprehensive proposal for a two-week hearing in April 2025.
Judge Amit Mehta will rule on these remedies by August 2025.
Alphabet has been hit by a barrage of lawsuits in recent months alleging that it has an unfair advantage for its Google Search function.
It’s likely that the company will fight this out in court which may drag on for years, and right now, there is only a remote possibility that the company will be broken up.
Still, the Justice Department is not the only party hounding Alphabet.
The European Union is also considering a breakup of the company to ease antitrust concerns last year.
It may take a while before pressure eases on Alphabet.
In the meantime, investors need to contend with frequent updates on these lawsuits and assess how the company tackles them head on.
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Disclosure: Royston Yang owns shares of Alphabet, Apple and Meta Platforms.
