TSMC Profit Surges 77%, SpaceX Falls Below IPO Price

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Thursday, July 16th. In today's episode, we'll tell you why hot names like SpaceX are getting crushed lately. We'll also recap a monster quarter from TSMC, and explain why the chip maker is investing another $100 billion in the US. Then stick around to the end of the show to find out how much T-Rex skeletons are going for these days. We got a great show for you today.
Let's go.
Stocks squeezed out another day of gains on Wednesday, the S&P 500 rose 0.4%, while the NASDAQ added 0.6%. Chip stocks took another hit though, with the SOX index falling more than 2%.
And overall, some of the hottest names in the market are getting crushed these days. SpaceX is a good example of this. It's been about a month since their IPO, and the stock actually fell below its IPO price of $135 a share on Wednesday. This is the same stock that jumped 50% on its first three days of trading, but the hype has started to fade. There are ETFs that track momentum stocks, which are stocks that have gone up a lot recently, and the momentum trade is down 7% for the month of July. So we're seeing investors move out of the hot names and into boring sectors like financials, which hit a record high yesterday, thanks to strong bank earnings this week. Apple also closed at record highs yesterday, and Apple is not exactly a sexy AI name. Now we'll see if the AI trade gets back on track because TSMC just reported monster earnings. We'll talk more about those in a bit. Now the other major concern for investors is Iran. The war is escalating again. The US has now struck Iran five days in a row, and for the first time, hit an oil tanker near Iran's main export terminal. Iran has fired back at American bases in Kuwait and Jordan, and shipping traffic through the Strait of Hormuz keeps shrinking. All of that tension is pushing oil prices back up. Brent Coot has jumped 11% this week and is trading around $85 a barrel. So yeah, the market has a lot to keep an eye on from oil prices to earnings. We're gonna stay on top of everything, including Netflix, which reports earnings later today. We'll recap those earnings on tomorrow's episode, along with everything else happening in the market. So if you're new here, it's a great time to get subscribed to the podcast and tune in every day to stay in the loop.
Let's run through some headlines. And we're talking TSMC. TSMC reported earnings this morning, and it was another blowout quarter for the Taiwanese chip maker, and yet another signal that the AI boom is alive and well. Now, a quick refresher on TSMC. They are the world's largest chip maker. They manufacture the majority of the advanced AI chips for Nvidia, Apple, AMD, Broadcom, you name it. And once again, their business continues to boom. Second quarter revenue came in at roughly $40 billion, which is up 34% from a year ago. And net income jumped 77% to almost $22 billion, blowing past Wall Street estimates and marking TSMC's fifth straight quarter of record profits. And the thing is, TSMC isn't slowing down. They've just raised their full year revenue guidance. They now expect growth to come in slightly above 40%. And TSMC also raised this year's CapEx budget to as much as $64 billion. The CFO said that spending on CapEx over the next three years will be significantly higher than the past three years. And I think this is a key detail because TSMC has historically been very conservative when it comes to expanding capacity and spending on CapEx. Just for some context here, TSMC's CapEx has been around $30 billion a year between 2021 and 2024 This is despite the AI boom kicking off in 2022 TSMC has been slow to raise CapEx. It jumped to $40 billion in 2025, but now they're expecting it to jump to $60-plus billion in 2026 So they must think that demand for AI chip manufacturing will be strong for the next few years if they're finally expanding CapEx so aggressively. Now the other notable thing to come from the earnings report was that TSMC announced that they are investing an additional $100 billion in Arizona, bringing their total US commitment to $265 billion, which they say is the largest foreign direct investment in US history. TSMC opened up a chip manufacturing plant in Arizona in 2024, and with this additional investment, they could build four more chip plants in the state. Now the reason that TSMC is doing this is partly to serve their American customers, like NVIDIA and Apple, closer to home. But it's also geopolitical insurance because the US government wants more critical chip production done here on US soil, and that's one reason the US government has invested in Intel. So I think TSMC is kind of feeling that pressure from Intel and investing more here in the US. The trade-off though is cost because manufacturing in the US is more expensive than in Taiwan. In fact, TSMC warned that overseas factories could reduce their gross margins by several percentage points. And that could be one reason why TSMC stock is down around 4% this morning, despite the blowout quarter. I also feel like expectations for names like TSMC are so high these days. I mean, TSMC stock has already gone up 30% this year, and over 70% in the last 12 months. So even with blowout quarters, the market is kind of numb to it. What I'm curious though, is if some of this investor anxiety about an AI bubble will fade away, at least temporarily, now that we've gotten back-to-back earnings from ASML and TSMC, both showing that AI demand is strong. Let me know in the comments on what you guys think. Are the earnings from these two companies enough for you to not worry about an AI bubble anymore?