Trump's comments were all it took for high-flying artificial intelligence chip suppliers to crash on Thursday. The former President said that Taiwan took “about 100%” of the U.S. chip business and that it should pay the U.S. for its defense.
The media did not bother to fact-check such claims. As a result, ASML (ASML) lost 12.74% on Thursday after posting a 10% Y/Y decline in revenue. Taiwan Semiconductor (TSM), which posts results next, lost 7.98%.
TSM’s strong results will bring fundamentals into focus again. The firm, which supplies chips for big customers like Apple (AAPL) and Nvidia (NVDA), will give investors an update on its outlook for the quarter and the year. Most importantly, the firm’s capital expenditure plans globally are a bright spot. The more it spends, the more it indicates that customers are making more advanced technologies.
Firms that rise when it is not a pure-play AI stock have long-term risks. For example, Broadcom (AVGO) acquired Vmware. It is now giving the professional software version away for free as it switches customers to a subscription-based model.
AMD (AMD), which lost 10.21%, faces serious competitive pressures from Nvidia in the desktop GPU and server AI markets. Chances are increasing that the stock will retest the $140 - $145 lows.
