AI Portfolio

Stock Market Today: Nasdaq Composite Falls & Taiwan Semiconductor (TSM) Blows Out Earnings

Eric Bleeker

Published: January 16, 2025 11:21 am

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S&P 500 Winners

11:13 am

What stocks are leading the S&P 500 today?

The top gainer is Lam Research, followed by KLA, and then Applied Materials. Each stock is up 7.1% to 8.4%. As we covered earlier, all these semiconductor equipment stocks are reacting favorably to Taiwan Semiconductor’s aggressive capital expenditure plan for 2025.

After those stocks, DexCom is up 5.5%. Then two more AI stocks are among the top performers. Vistra Corp. (NYSE: VST) is up 4.1% and Palantir (Nasdaq: PLTR) is up 4.3%.

 

Can the S&P 500 gain for its fourth consecutive day? Stocks ripped higher yesterday after lower-than-expected inflation data was announced. However, markets are far more muted today. As of 11 a.m. ET major indexes were largely flat with the Nasdaq Composite seeing the largest drop:

• S&P 500: Down 3.72 (-.05%)
• Dow Jones Industrial Average: Down 81.41 (-.18%)
• Nasdaq Composite: Down 47.38 (-.24%)
• Russell 2000: Down 4.30 (-.19%)

Here are some of the biggest storylines in the market today.

Outstanding Earnings from Taiwan Semiconductor

Earnings from Taiwan Semiconductor (NYSE: TSM) are increasingly a bellwether for the artificial intelligence space. The company sells to a diversified group of end markets, including high-performance computing, mobile phones, the Internet of Things, and the auto industry.

However, its profits are increasingly driven by its 90%-plus market share in ‘AI accelerators’ like those designed by NVIDIA (Nasdaq: NVDA) and Broadcom (Nasdaq: AVGO).

Taiwan Semi’s fourth-quarter earnings had the following highlights:

• Revenue: $26.24 billion (versus estimates of $25.83 billion)
• Profits of $11.31 billion (versus estimates of $11.17 billion)

Guidance for the first quarter was excellent as well, coming in at a midpoint of $25.4 billion, well above expectations of $24.43 billion. The company also issued some very ‘bullish’ statements on the future of artificial intelligence demand.

For example, Taiwan Semiconductor said they expect the market for AI accelerators to double in 2025 after tripling in 2024. Not long ago, the market’s growth expectations stood at about 50% in 2025.

The company also projected 20% compounded annual growth (CAGR) through 2028 and increased its capital expenditure guide for 2025 to a midpoint of $40 billion. That’s significantly above expectations of $36 billion.

That last part – the capital expenditure guide – is music to the ears of semiconductor equipment companies which are all seeing strong gains today. Leaders in that space include ASML (Nasdaq: ASML), Lam Research (Nasdaq: LRCX), and Applied Materials (Nasdaq: AMAT). Each of those stocks is up 5 to 8% in midday trading.

Bank of America Beats Earnings

Yesterday we covered a very busy day in banking earnings. Long story short, every single major company topped earnings estimates. Today, Bank of America (NYSE: BAC) was the latest major bank to release earnings, and the results were very good.

The company delivered earnings of $.82 per share versus expectations of $.77. In addition, revenue of $25.5 billion topped Wall Street estimates of $25.19 billion.

Despite the solid earnings, Bank of America shares are down about 1% in midday trading. The stock has jumped nearly 13% since the day before Trump won the U.S. Presidential Election – an event that led to a broad rally in financial stocks – so it may be taking a breather after seeing strong gains in recent months.