What happened
Taiwan Semiconductor Manufacturing (TSM 3.12%) stock is losing a bit of ground in Thursday's trading. The semiconductor fabrication leader's share price is down 1.2% as of 11:30 a.m. ET, according to data from S&P Global Market Intelligence.
TSMC stock opened today's trading sessions with significant gains following better-than-expected second-quarter results from Nvidia (NVDA 1.32%) -- one of its key customers. But while the Taiwan-based fabrication specialist's share price was up as much as 2.7% in the daily trading session, it hasn't been able to hold on to the gains.
NYSE: TSM
Key Data Points
So what
Nvidia published its second-quarter results after the market closed yesterday, posting results that came in well ahead of the market's expectations. The leader in graphics processing unit (GPU) hardware recorded earnings of $2.70 per share on revenue of $13.51 billion, breezing by the average Wall Street analyst's target for per-share earnings of $2.09 on sales of $11.22 billion.
Nvidia stock jumped early in Thursday's daily trading session, but its gains have receded as the day has progressed. While the stock was as much as 6.7%, its gains have narrowed to 1.7% as of 11:30 a.m. ET, according to S&P Global Market Intelligence's data.
NASDAQ: NVDA
Key Data Points
After an initial bout of post-earnings excitement, investors may have broadly taken a more cautious approach to Nvidia stock, given the company's already heavily growth-dependent valuation. But it looks as if trends for the broader market are also playing a role in the pullback.
The S&P 500 index is down roughly 0.5% as of this writing, while the even more growth-focused Nasdaq Composite index has seen its level fall 0.9%. With Nvidia stock losing ground after its initial pop and the broader market seeing some bearish pressures, TSMC has slipped into the red despite initially posting gains early this morning.
Now what
Despite volatility for TSMC stock today, Nvidia's Q2 report arrived with good news for the fabrication company's shareholders. Thanks to strong demand for its artificial intelligence chips and services, Nvidia now expects to post revenue of approximately $16 billion in the current quarter. That's far better than the average analyst's previous target for sales of $12.61 billion in the period.
According to some estimates, services provided to Nvidia account for roughly 10% of TSMC's overall revenue. But that figure is likely increasing quickly. Additionally, fabricating the advanced chips that go into Nvidia's processors generates relatively high margins for TSMC -- so the company should see significant sales and earnings tailwinds as the GPU leader's business continues to expand.
