1. TSMC: Chips, Cash, and American Soil
Taiwan Semiconductor Manufacturing (TSM -1.80%) just booked its sixth straight quarter of record profit. The world’s largest contract chipmaker builds the advanced processors most of the tech industry designs but doesn’t make. Third-quarter revenue topped management’s guidance while net income jumped 69% to a record NT$763.1 billion (about $23.9 billion). The broader sell-off in artificial intelligence (AI) stocks still sent the Team Hidden Gems recommendation down over 1% ahead of the open.
- A margin beat during a ramp: As TSMC ramped up its new 2-nanometer process, gross margin dipped slightly. Operating margin of 58.7%, however, topped TSMC’s 58% guidance range. A manufacturer that keeps more than half of each sales dollar as operating profit holds incredible pricing power. AI customers have few other places to take their orders. High-performance computing, the chips behind AI and data centers, made up 68% of revenue.
- Cash is funding the U.S. build-out: TSMC plans to invest $265 billion in Arizona and is reportedly weighing Texas as well. Management still expects Q4 operating margin of 56.5% to 58.5%. TSMC has the cash (its free cash flow jumped almost 66% in Q3), is racing to meet global demand, and is confident it will earn big margins throughout.
2. Rocket Lab Dives 10% as Neutron Slips to 2027
Rocket Lab’s (RKLB -6.64%) big rocket isn’t taking off just yet. On Wednesday, it said Neutron’s first flight has slipped to 2027. Neutron is a reusable medium-lift rocket that lets Rocket Lab bid for larger commercial, civil-space, and national-security contracts than its small Electron can carry. The Team Hidden Gems recommendation fell 10% in pre-market trading.
- The slip was telegraphed in August: In August, Rocket Lab said it aimed to get Neutron to the launch pad in the fourth quarter. Rocket Lab plans to charge about $55 million per Neutron flight, compared with around $8.5 million per Electron flight. Each delay pushes that revenue further out.
- Worth waiting for: Fool contributing analyst Lou Whiteman praised Rocket Lab’s transparency about its progress. He concluded, “Nothing is certain, but the long-range risk/reward hasn’t changed. If Neutron eventually flies, the quarter won't matter, but until it does, it is the biggest single risk facing the stock.” The stock has outperformed the S&P 500 by 20% since the August 2025 Stock Advisor recommendation from Team Hidden Gems.
3. Phones Are Running Out of Memory
Global chip stocks are selling off as investors question whether the AI-driven rally has overextended. CoreWeave (CRWV +5.94%) fell 15% Wednesday after the yield on its 2032 bonds touched 15%. Its debt had reached about $52 billion in June, up from about $15 billion a year earlier. The selling spread across AI stocks. Nvidia (NVDA -1.84%), Broadcom (AVGO -0.56%) and Intel (INTC -2.80%) all closed more than 3% lower Wednesday and were down at least 1% before Thursday’s open.
- Phone makers are paying the bill: IDC reported a 22% year-over-year drop in global smartphone shipments in Q3. China’s shipments fell for the sixth straight quarter, down 15.4% to 57.9 million units. Apple’s (AAPL -0.28%) global shipments fell 4.3%, but its market share rose four percentage points to 22.4%. AI data centers are eating up memory supply, driving up phone prices and causing consumers to delay purchases.
- Scarcity is the memory makers’ edge: The sell-off reflects two distinct pressures. There are AI credit and valuation concerns, plus a deteriorating smartphone end market. Memory pricing is a key indicator to watch now. Memory suppliers are winning today because prices are high, but those same high prices are hurting their customers. If that continues, today’s margin tailwind can become tomorrow’s volume headwind.
4. Two Earnings to Watch Today
Two of our recommendations report today.
- Prologis (PLD -2.70%), the warehouse and logistics landlord, reports before the opening bell. The Team Rule Breakers and Team Hidden Gems recommendation has met or beaten earnings-per-share estimates in each of the past four quarters. Any update to full-year guidance matters most. Watch out for management’s views on the SEGRO takeover that is expected to close in the first half of 2027.
- Interactive Brokers (IBKR +2.25%), the online broker and a Stock Advisor recommendation by Team Hidden Gems, reports third-quarter results after the close today. Analysts expect earnings of 67 cents per share, roughly 17.5% growth from a year ago. Monthly metrics already showed September trading activity was up 6% year over year. That shifts the debate to net interest income and margin lending (loans customers take out to buy stocks). Both tie to interest rates and customer balances.
5. Losing to Win: A VC Lens Will Find the Next Nvidia
Team Rule Breakers
In the second half of 2009, Chief Rule Breaker David Gardner made four recommendations in Stock Advisor. Judged individually, most look unremarkable today. Adobe (ADBE +4.57%), selected that August, lags the S&P 500 by roughly 320%. Dassault Systèmes (DASTY +3.43%), recommended the following month, trails the market by more than 500%. Hasbro (HAS +3.09%), picked that October, lags by roughly 420%.
- Winners were in the minority… and that’s more than fine: Nvidia, recommended that December at a split-adjusted $0.38, trades today at $221.30. That’s an outperformance of more than 54,000 percentage points.
- The math proves the point: Average the other three names and the basket lags the S&P 500 by roughly 415%. Add Nvidia, and that average rockets past 13,000%.
As David puts it, "We lose to win." We don't need most recommendations to work. We need one or two in every five to work enormously, the venture-capital mindset of expecting most of a portfolio to fail so a single winner pays for everything else. It's why The Motley Fool recommends holding at least 50 stocks across many industries: the wider the net, the better the odds of landing the next Nvidia. We'll keep recommending stocks other analysts call too early, too small, or too strange. That's exactly where the next 54,000%-outperformer is hiding.
6. Today’s Question!
Does having a huge portfolio winner make you more patient or less forgiving with your laggards?
Discuss with friends and family, or become a member to hear what your fellow Fools are saying!
