tsmc

TSMC Says Crypto Strong Again? Good for AMD NVIDIA

TSMC said they saw, “strong demand from crypto mining” in Q2. AMD and NVIDIA had cut crypto estimates for Q2.

For Q2 AMD (NASDAQ:AMD) said, they expect a “modest decline in graphics due to blockchain.”

NVIDIA (NASDAQ:NVDA) said, “Looking into Q2, we expect crypto-specific revenue to be about one-third of its Q1 level.”

TSMC’s telling you Q2 was strong, not as bad as people would have thought. That sounds much better than AMD or NVIDIA expected.

Like we said ahead of Q1’s reports TSMC hinted to strong crypto then while AMD and NVIDIA were being swarmed by bear stories.

Bullish.

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We have no holdings in the stocks mentioned unless otherwise noted.

TSMC Trade War Comments Hint Ahead Of Earnings Season

TSMC’s founder’s comments may have given us a real-time read into the trade war impacts on current business.

We have been bulled up on Q2 tech stock earnings. Since doing the work on our companies though trade war shots could have spooked Q3 company ordering decisions which would change the strong potential Q2 trend.

We don’t think Q3 will be weak but we’re listening for any early evidence of any companies talking about what they’re seeing in Q3. Those Q3 changes can affect the stock prices and sentiment.

TSMC Has Helped Us In The Past

We’ve successfully used TSMC comments to give us conviction ahead of AMD (NASDAQ:AMD) and NVDIA’s (NASDAQ:NDVA) quarters last quarter.

TSMC was just out implying that they see no change in business from the trade war.

Yes they are worried about the risks of the trade war but if you listen carefully to what they said, we’d guess they are not seeing any weakness just yet.

TSMC founder Morris Chang said, “Currently, businesses are not yet actors in this reality show but they could be added into the casting anytime.”

That means to us, in Mr. Chang’s view business has not slowed because of the trade war yet.

He went on to say, “TSMC is still doing well but we need to be on alert.”

That implies to us they are not seeing orders pulled yet in Q3.

Conclusion

Earnings begin to report next week. We want to listen carefully if there’s been any trade war induced slowdown in the tech supply chain.

We’ve said previously that we think the accelerated pace of revenue growth in Q2 could soften any Q3 blow given the trends coming into this trade war were so strong.

On the one hand we’re early and would guess not much trade-war induced slowdown happened. On the other hand we want our ears on the train tracks listening for any change. That can help bias our positioning going into key earnings reports.

Mr. Chang’s “on alert” sounds right.

Hitting Tech Stock Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

We’re about to hit our prime time, earnings season.

START FREE TRIAL

Read Reviews

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

AMD NVIDIA Still Good With Soft Crypto

If you remember AMD and NVIDIA were trounced ahead of their last earnings reports.  Investors were concerned that weak crypto mining would hurt sales. They were of course wrong.

We were bullish on both companies anyway but when we saw TSMC come out bullish on crypto twice ahead of earnings it gave us even more conviction.

TSMC Out Again On Crypto

TSMC just came out sounding a little more bearish this time on crypto in their recent monthly revenue update.

Last time TSMC said “strength in crypto mining.”

This time they said, “growing uncertainty facing the cryptocurrency mining market.”

That’s a little less bullish coming out of TSMC which was a great heads up before AMD and NVIDIA earnings.

Both stocks catapulted since earnings.

What About AMD and NVIDIA This Time

I think TSMC’s comments, while not great, are fine for AMD and NVIDIA anyway. Both AMD and NVIDIA slashed estimates going forward for mining related revenues.

Two quarters ago NVIDIA expected crypto-related revenues to be “flat” sequentially. They ended up seeing strong sales. But last quarter they slashed crypto related estimates to be down by “one-third of its Q1 level.”

So if mining related revenues are in fact weak it sounds like NVIDIA’s guidance reflects that.

As for AMD they said 10% of their revenues last quarter were “blockchain” related. They guided that they expect the year to be “mid to high-single digit percent of revenue for 2018.” So AMD also expects sales to fall off from crypto.

So any crypto-related weakness as pointed out by TSMC is factored into both AMD and NVIDIA’s guidance.

BTCUSD
Source: Bitcoin Price

Bitcoin Price Dropping Adds To This

Bitcoin down adds weight to TSMC’s comments. But again, AMD and NVIDIA having lower expectations for crypto gives us comfort that their growth estimates are not dependent on crypto strength.

Conclusion

I think we’re ok.


All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. Model portfolio trades and positions are hypothetical to be used for directional analysis and ratings purposes.

We are long AMD for a customer.