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The Zacks Analyst Blog Highlights: Taiwan Semiconductor, Apple, NVIDIA, Qualcomm and Texas Instruments

Zacks Equity Research
·6 min read

For Immediate Release

Chicago, IL – October 19, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Taiwan Semiconductor Manufacturing Company TSM, Apple AAPL, NVIDIA NVDA, Qualcomm QCOM and Texas Instruments TXN.

Here are highlights from Friday’s Analyst Blog:

What Taiwan Semi Earnings Indicates About These Top Tech Stocks

Taiwan Semiconductor Manufacturing Company missed the Zacks Consensus Estimate on both the top and bottom lines and the shares moved marginally lower in response.

Any other company would have been punished more severely. But Wall Street is already aware that this is the number one semiconductor company, possessing all the leading-edge manufacturing technologies that tech leaders like Apple, NVIDIA and Qualcomm rely on. To a lesser extent, we have Texas Instruments also dependent on it since they outsource some chip manufacturing to the company.

To be fair, TSM grew revenue and earnings over 29% and over 45%, respectively, from the September 2019 quarter, which is no mean feat. But street estimates jumped 11 cents on average 7 days ago, which was a couple of cents higher than what the Zacks Rank #2 (Buy) company actually achieved.

The revenue distribution by platform clearly shows smartphones as the largest segment, comprising a 46% share, followed by high-performance computing (HPC) at 37% and the Internet of Things (IoT) at 9%.

While Apple is its largest customer, it was the HPC segment (likely NVIDIA grew the strongest. HPC in fact is expected to remain the strongest growth driver over the next few years. Its 25% growth was followed by an almost equally strong IoT segment that grew 24%.

Smartphones only came thereafter with 12% growth, but it’s commendable considering that the market isn’t so strong any more. It’s only the growing silicon per phone and the company’s own share gains that’s allowing it to grow at these levels.

7nm now makes up the largest share at 35%, followed by 16nm at 18% and 5nm at 8%. The company’s strategy of de-emphasizing 10nm to jump to 7 has clearly paid off.

In what appears to be clear a reference to the above companies, CEO C. C. Wei said on the call: “Moving into the fourth quarter 2020, we expect our sequential growth to be supported by strong demand for our industry-leading 5 nanometer technology, driven by 5G smartphone launches and HPC-related applications.”

Moreover, there’s the expectation that customers will maintain above-seasonal inventory levels, because of concerns about supply chain issues. As a result, TSM is seeing stronger-than-expected demand.

So the company now expects to grow 30% in 2020, faster than the 20% growth expected of the foundry industry and mid-single-digit growth expected of the semiconductor industry, based on its achieving the industry sweet spot with process leadership that’s on time to catch the 5G and HPC revolutions.

Implications for Apple et al-

Apple

TSM is its main foundry partner and management commentary on the earnings call appeared to directly refer to Apple. From these, it appears that Apple will have a strong fourth quarter. But because it will build some inventory, sales may not be as strong as prior launches.

This Zacks Rank #3 (Hold) company has an earnings expected surprise prediction (ESP) of 1.29%, indicating that it will beat estimates.

NVIDIA

It does look very good for NVIDIA, not only this quarter but also the next few years.

This Zacks Rank #3 (Hold) company has an earnings expected surprise prediction (ESP) of 1.75%, indicating that it will beat estimates.

Qualcomm

TSM was its largest foundry partner last year and will likely be so this year as well. But the company is also expanding its supplier base as Samsung’s 5nm process comes online.

This Zacks Rank #3 (Hold) company has an earnings expected surprise prediction (ESP) of -31.0%, so we don’t know if it will beat estimates. It has however topped estimates in each of the last four quarters at an average rate of 14.3%.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.


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NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
 
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
 
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
 
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