Breakfast News: TSMC Flags AI Demand

Source: Image Created by Jester AI.

1. TSMC Raises Forecasts as AI Momentum Grows

Taiwan Semiconductor Manufacturing (TSM 0.35%) posted a strong set of second-quarter results, with net income jumping 60.7% to a record high. The full-year outlook increased, as momentum in artificial intelligence (AI) spending continues.

• "TSMC results again ease fears of an AI slowdown." Billy Leung, investment strategist at Global X ETFs, pointed to the demand outlook, alongside strong profit margins, as reinforcing confidence in the continued buildout of AI.
• Increasing projected 2025 sales growth to 30% from mid-20%: Apple (AAPL 0.51%) and Nvidia (NVDA 0.37%) are two large clients, so higher sales growth suggests related tech companies will continue spending to fuel further AI development.

2. Nvidia's Huang Praises Chinese AI

Nvidia CEO Jensen Huang has lauded DeepSeek and other Chinese AI research companies in helping the rest of the world, as he pushes to accelerate the recovery of sales in the country.

• "A-plus quality science and A-plus quality engineering." Huang said that China's open-source AI models provided a catalyst for global progress, allowing every country to boost its AI capabilities.
• Export licenses "to come through very shortly." Nvidia expects to be able to begin shipments of the H20 processors to China imminently, with Huang admitting that some of what the company had to write off financially will be hard to recover.

3. Trump Refutes Powell Firing Claims

President Donald Trump denied earlier reports that he was planning on removing Federal Reserve Chair Jerome Powell soon, which had caused a short-term nosedive in the stock market, but refused to "rule out anything."

• "I think it's highly unlikely, unless he has to leave for fraud." The move in the stock market, correlated with a spike in U.S. Treasury yields and a fall in the U.S. dollar, came after the notion to fire Powell was reportedly brought up in a meeting with congressional Republicans.
• "We think Trump is testing the markets to see whether he can fire Powell." Anna Wong, chief economist at Bloomberg Economics, feels the sharp reaction to the report caused the president to backtrack temporarily, but expects things to escalate.

4. Earnings to Watch Today

Netflix (NFLX -0.70%) will report quarterly earnings after the closing bell, with investors focusing on the more diverse entertainment offerings and increasing engagement trends.

• Watching for increased client activity: Interactive Brokers (IBKR -0.35%) is expected to post earnings after the market closes, with analysts projecting a 13.8% growth in revenue thanks to market volatility.
• Outperforming the S&P 500 by 53% this year: GE Aerospace (GE 0.65%) is hoping to build on the strong previous quarter when results come out before the opening bell. Any easing of recent supply chain problems will be cheered.

5. Your Take

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