TSMC joins the trillion-dollar club

Hey Superheroes,

Gold prices charged to an all-time high this week amidst expectations of more U.S. Fed rate cuts, the fast approaching U.S. presidential elections and rising geopolitical tension.

Inflation has meanwhile fallen across many parts of the globe – U.S. inflation cooled to 2.4%, its lowest in three years, while headline prices in the Euro area fell to 1.8%, lower than targets of 2%.

Perhaps all that may have played a factor in both the ASX and Wall Street closing at fresh records this week. Or perhaps Wall Street’s earnings season may have played a part. Either way, let’s dive into some of the biggest news.

There’s nothing artificial about the AI boom, at least for chipmakers

With AI marching into the world and onto our phones, demand for advanced semiconductor chips has soared exponentially.

It’s no wonder then that Taiwan Semiconductor Manufacturing Co (NYSE:TSMC), the world’s largest contract chipmaker, is also Asia’s most valuable publicly listed company with a market cap of US$923 billion (~A$ 1.38 trillion). 

As if that wasn’t enough, TSMC’s share price soared by 9.8% overnight, cementing its entry into the trillion-dollar club.

🤯 AI couldn’t forecast this

TSMC reported a 54% jump in quarterly profit alongside estimates of full-year revenue growth of nearly 30% year-on-year – up from previous estimates of the mid-20% range. 

Last quarter alone, TSMC recorded a whopping TW$325.3 billion (~A$ 15.1 billion) of net profit, beating analyst estimates of TW$300 billion. That’s the highest it’s ever recorded in a single quarter.

Citing the AI surge as the main contributor of its soaring numbers, the Taiwan-based company boasts a high-profile customer base that includes the likes of Apple and Nvidia.

🌎 Protecting against geopolitical tensions

Acknowledging rising geopolitical tensions, specifically between the U.S. and China, TSMC began building three chipmaking plants in the U.S. in 2021.

With an investment of US$65 billion, one of its plants is set to begin production early next year. The other two are scheduled to be ready by the end of the decade.

TSMC shares are now up 102% year-to-date.

Rio Tinto Delivers a Swing and a Miss in Q3

It’s a busy month for Rio Tinto. Last week, Rio Tinto’s announced its decision to acquire Arcadium Lithium – the dual-listed lithium producer – for A$9.9 billion. This week, we got a glimpse of its performance.

🤓 The numbers

The mining giant’s Q3 update showed the company falling short of expectations set by Goldman Sachs analysts. 

Iron ore shipments totalled 84.5Mt, below estimates of 86.2Mt. 

Copper production also came in below expectations, plus down 2% quarter-on-quarter, thanks to disruption within its mines. The company expects this to impact production by ~50,000 tons this year. 

Despite slow numbers, Rio has kept full-year production guidance unchanged. Its shares are down 2.6% for the week.

🔦  Some other things we’re shining the Spotlight on:

IT’S FINE: The Star has had a tough journey recently with its share price tanking over 40% in a single day. As if that wasn’t enough, the NSW casino regulator decided to hit it with a A$15M fine. However, it has successfully retained its licence.

UP BUT OUT: While Meta shares are up over 60% this year, the company is laying off employees across units including Instagram, WhatsApp and Reality Labs. Perhaps Mark Zuckerberg’s “Year of Efficiency” is still going.

JP MORGAN STEPS IN: The world’s largest bank will begin supplying payment terminals and online facilities to its retailing customers operating in Australia. This is set to add competition to the local payments industry, with Stripe and Square already setting up partnerships with some of the Big 4 Banks. 

Tesla, Amazon and IBM are among those reporting earnings next week. Keep up to date on the markets by following us on Instagram, @superheroau!