Breakfast News: Taiwan Semi Holds Steady

Breakfast News: Taiwan Semi Holds Steady

Source: Image Created by Jester AI.

With markets closed tomorrow for Good Friday, Breakfast News will be back in your inbox on Monday, April 21.

1. TSMC sticks to a positive outlook

Taiwan Semiconductor Manufacturing (TSM -2.02%) posted first-quarter net income ahead of analyst expectations and held to its growth outlook for 2025, signaling that the world's largest chipmaker could weather any potential trade war ramifications. The stock jumped almost 5% in pre-market trading.

• "We are mindful of the potential impact from all the recent tariff announcements." Although CEO C.C. Wei acknowledged the potential disruption stemming from possible import levies, he stated that the management team had already taken it into consideration when providing (and sticking to) the full-year outlook.
• Results "impacted by smartphone seasonality, partially offset by continued growth in AI-related demand": North America continued to dominate by geography, hitting 77% of total revenue, up from 69% a year ago. The high-performance computing division now accounts for more than half of revenue (59%), in contrast to 46% in Q1 2024.

2. Trade focus on Asia

Progress on trade talks between the U.S. and Japan, with President Donald Trump directly involved, helped to spur Asian markets and U.S. stock futures higher on Thursday. Chinese President Xi Jinping called for regional unity during his tour of Southeast Asia, a move perceived as a counter to U.S. tariff pressure.

• Big tech caught between trade tensions: Nvidia (NVDA -1.02%) fell almost 7% on Wednesday, with Advanced Micro Devices (AMD -0.25%) closing 7.35% lower, as new export licensing requirements are being implemented to curb the sale of advanced AI chips to China.
• AMD expects $800 million charge: China was the second-largest market for the business in 2024, but concerns from the U.S. around DeepSeek and other national security worries mean the administration's tough stance is unlikely to change.

3. Powell waves warning flag

U.S. Federal Reserve Chairman Jerome Powell acknowledged trade tariffs could generate higher inflation and slower growth, meaning interest rates could stay higher for longer.

• "We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension." He spoke about how the task of keeping prices stable while maximizing employment will become more challenging, with a strong likelihood that the economy will be moving away from both of these targets this year.
• 85.1% chance of no cut in May: According to the CME FedWatch tool, the probability of a 0.25% rate cut at the next meeting is fading fast, with the 27.4% chance of a cut a week ago now at 14.9%. The shift comes partly in response to Powell's comments about inflationary effects being more persistent.

4. Next Up: Thursday's selected earnings

Stock Advisor recommendation Netflix (NFLX -0.14%) is slated to release Q1 results after the closing bell. Although the company no longer reports subscriber numbers, watch for user engagement as a critical metric of strong customer satisfaction and loyalty.

• The sixth-largest U.S. commercial bank: Hidden Gems rec Truist Financial (TFC -0.48%) reported before the market opened, with a fall in Q1 profit snapping the run of beating profit consensus estimates for the fifth straight quarter. The weakness was put down to the investment banking and trading units, with market volatility causing a delay in deal-making.
• "Potential homebuyers have been more cautious due to continued affordability constraints and declining consumer confidence." D.R. Horton (DHI -0.13%) also released earnings ahead of the opening bell, with a double-digit percentage decline in both revenue and profit due to continued macroeconomic challenges and high market competition.

5. Foolish fun

Will Netflix win the rights for UFC, and how much will they pay? Or will Amazon (AMZN -0.87%) -- or someone else -- prove victorious? Debate with friends and family, or become a member to hear what your fellow Fools are saying.