Market Overview - The Dow Jones Industrial Average surged 426 points, or 0.9%, indicating a renewed interest in large-cap stocks [1] - The S&P 500 and Nasdaq also saw gains of 0.7% and 0.9% respectively, driven by a rebound in semiconductor stocks and strong bank earnings [1] Semiconductor Sector - Taiwan Semiconductor Manufacturing Company (TSMC) reported fourth-quarter revenues of $33.1 billion, a 20.5% year-over-year increase, and announced a capital expenditure budget of $52 billion to $56 billion for 2026, a 37% increase from 2025 [3][4] - TSMC's aggressive capex plan signals strong confidence in sustained demand for AI chip-making capacity, benefiting the entire supply chain including equipment makers like ASML and Applied Materials [4] - TSMC shares rose over 6%, and the VanEck Semiconductor ETF climbed 3.34%, indicating a robust outlook for the AI chip market [5] Banking Sector - Goldman Sachs reported a 12% profit increase to $4.62 billion, with deal-making fees up 25% year-over-year, while Morgan Stanley's profit jumped 18% to $4.4 billion, driven by a 47% revenue surge in investment banking [6] - Both banks' stocks reached fresh 52-week highs, with Goldman advancing 4% and Morgan Stanley nearly 6% [7] Economic Indicators - Weekly jobless claims were reported at 198,000, better than the expected 215,000, indicating resilience in the labor market [7] - A significant drop in Brent crude oil prices, down more than 4% to around $63.69 per barrel, alleviated inflation pressures, which typically benefits cyclical and financial stocks [8]

Core Viewpoint - Nvidia's stock is experiencing significant gains following a positive business update from Taiwan Semiconductor Manufacturing (TSMC), indicating strong demand for AI chip fabrication and boosting investor confidence in Nvidia's growth potential [1][2][4]. Group 1: TSMC's Earnings Impact - TSMC reported fourth-quarter earnings that exceeded Wall Street expectations, with non-GAAP earnings per share of $3.14 on sales of $33.7 billion, surpassing analyst estimates of $2.98 per share and $32.73 billion in revenue [3]. - The strong performance from TSMC suggests robust demand for AI chip fabrication, which is a positive indicator for Nvidia's ongoing demand for its processors [4]. Group 2: Nvidia's Market Position - Following the gains, Nvidia's market capitalization reached approximately $4.59 trillion, with a valuation of about 21.5 times expected sales and 40 times expected earnings for the year [5]. - Despite concerns about potential slowdowns in AI infrastructure spending, TSMC's strong Q4 report has provided a renewed buy signal for risk-tolerant investors in Nvidia stock [5].

Trade Deal Overview - The U.S. and Taiwan have finalized a trade deal that reduces tariffs on Taiwanese semiconductor exports and encourages new investments in the U.S. technology sector, while potentially escalating tensions with China [1][2]. Tariff Reductions - Tariffs on Taiwanese semiconductor imports and related manufacturing equipment will be lowered, with broad tariffs on other Taiwanese exports to the U.S. decreasing from 20% to 15% [2]. - Generic pharmaceuticals, aircraft components, and certain natural resources will face a 0% tariff [3]. Investment Commitments - Taiwanese companies are set to invest $250 billion in U.S. semiconductor, energy, and artificial intelligence production, including $100 billion already pledged by TSMC by 2025 [4]. - Taiwan will also provide an additional $250 billion in credit to support further investments [4]. Supply Chain Impact - The deal aims to relocate 40% of Taiwan's chip supply chain and production to the U.S., with significant tariff implications if production does not occur domestically [5]. - Increased chip production is expected to benefit major suppliers to TSMC, including ASML, Lam Research, and Applied Materials, as well as smaller suppliers like Sumitomo Corp and Qnity Electronics [6]. Market Reactions - Following the announcement, shares of Nvidia rose over 2%, while shares of ASML, Lam, Applied Materials, and Qnity increased by approximately 4% to 6% [7].

Core Viewpoint - The U.S. and Taiwan have established a trade agreement focused on semiconductor manufacturing, with significant investments and tariff adjustments aimed at enhancing chip production in the U.S. Group 1: Investment and Production Capacity - Taiwanese chip and technology companies will invest at least $250 billion in production capacity in the U.S. [1] - The Taiwanese government will guarantee $250 billion in credit for these companies [1] Group 2: Tariff Adjustments - The U.S. will reduce reciprocal tariffs on Taiwan from 20% to 15% [2] - There will be zero reciprocal tariffs on generic pharmaceuticals, their ingredients, aircraft components, and some natural resources [2] Group 3: Specific Company Developments - Taiwan Semiconductor Manufacturing Company (TSMC) has acquired land in Arizona and is expected to expand its operations there as part of the agreement [2][3] - Taiwanese companies building new chip fabs in the U.S. will be able to import up to 2.5 times the amount of capacity they are constructing without incurring tariffs during the construction phase [3] Group 4: Additional Tariff Exemptions - Taiwanese auto parts, lumber, and related products will also be exempt from tariffs exceeding 15% under the Section 232 framework [4]

Group 1 - The lifting of uncertainty regarding a potential military strike on Iran by President Trump has positively influenced market sentiment [1] - Futures markets stabilized after Trump indicated a possible halt to military action, contributing to a more optimistic outlook [2] - Strong jobs data did not deter investor enthusiasm, with initial claims data better than expected and reduced odds for an interest rate cut in early April [2] Group 2 - Sector performance showed improvement, with eight sectors in positive territory, indicating broadening market strength [3] - Technology sector led gains with a 1.38% increase, while energy sector showed signs of stabilization after earlier losses [3] - ASML Holding experienced a significant gain of over 6% following TSM's announcement of larger-than-expected capital spending [4] Group 3 - TSM's earnings beat led to a rally in memory chip stocks, with notable increases in shares of SanDisk (8%), Western Digital (over 6%), Micron Technology (more than 2%), and Seagate Technology (over 4%) [5]

Group 1 - Taiwan Semiconductor Manufacturing Company Limited (TSM) is recognized as a strong long-term growth stock by hedge funds, with Citi raising its price target to NT$2,450 from NT$1,800 and maintaining a Buy rating [1] - TSM reported a consolidated net revenue of approximately NT$335.00 billion for December 2025, reflecting a 2.5% decrease from November 2025 but a 20.4% increase from December 2024 [2] - The total revenue for TSM from January to December 2025 reached NT$3,809.05 billion, marking a 31.6% increase compared to the same period last year [2] Group 2 - TSM experienced a 20.45% increase in Q4 revenue, surpassing market forecasts, driven by heightened demand for its products due to the growing interest in AI applications [3] - TSM is the largest contract semiconductor manufacturer globally, serving prominent clients such as Advanced Micro Devices, Nvidia, and Broadcom, who outsource their chip production [4]

Nvidia founder and CEO Jensen Huang speaks about the Vera Rubin AI platform during a question and answer session with reporters at the annual Consumer Electronics Show (CES) in Las Vegas, Nevada, on Jan. 6, 2026.Chipmakers Nvidia and Advanced Micro Devices led an industrywide rally in the U.S. on Thursday, alongside semiconductor manufacturers like Applied Materials, after Taiwan Semiconductor Manufacturing Company reported better-than-expected earnings.Nvidia, the world's most valuable company and the lead ...

The AI supercycle is far from exhausted, and semiconductor companies like industry titan TSMC (TSM) are among the catalysts to watch. "This earnings report, really more than anything, supports the idea that [the AI boom] is going to continue to move forward," Victoria Fernandez, chief market strategist at Crossmark Global Investments, told Yahoo Finance's Opening Bid. According to Fernandez, the great "rotation" out of Big Tech might finally "start to slow down a little bit." While market skeptics spent ...

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Core Insights - Taiwan Semiconductor Manufacturing Company (TSMC) reported a revenue of $33.73 billion, exceeding consensus estimates by over $400 million, marking a 25.5% year-over-year increase and a 1.9% sequential rise [1] - The company achieved a gross profit of $16.3 billion, up 35% year-on-year, surpassing the consensus of approximately $15 billion [1] Financial Performance - TSMC's management provided guidance for Q126 revenue between $34.6 billion and $35.8 billion, significantly higher than the prior consensus of $32.5 billion [2] - Gross profit margin is expected to be between 63% and 65%, while operating profit margin is projected to be between 54% and 56% [2] - The gross margin for the latest quarter was reported at 62.3%, exceeding the guidance of 60% [3] Market Position and Demand - TSMC is experiencing unprecedented demand for its services, allowing it to leverage its capacity for higher revenues and profits [4] - Current demand for advanced nodes (3nm and 5nm) is approximately three times higher than TSMC's available capacity, indicating a significant backlog [9] - The company is focusing on maintaining strategic pricing rather than opportunistic pricing, reflecting its long-term relationship with customers [4] Capital Expenditure and Future Outlook - TSMC raised its 2026 capital expenditure projection to $52-$56 billion, up from previous expectations of $40.9 billion for 2025 [4] - The planned buildout in Arizona could total $165 billion, including six fabs and two advanced packaging sites, with new capacity expected to come online by 2028 or 2029 [6] - Management emphasized that aggressive investment is driven by sustained AI demand and tight supply conditions [6] Technological Advancements - TSMC's A16 technology roadmap is on track for volume production in the second half of 2026, featuring Super Power Rail technology for improved efficiency [13] - The A16 node is expected to deliver an 8-10% speed increase or a 15-20% power reduction compared to the N2P process [14] Customer Dynamics - Apple is projected to account for 22%-25% of TSMC's sales, while NVIDIA is expected to consume nearly 20% of capacity, with both companies representing almost half of TSMC's sales [15][16] - High-Performance Computing (HPC) has overtaken the smartphone segment as the primary revenue driver for TSMC, with Broadcom's share rising to 11%-15% of sales [17]