AI chip demand surge reflected in TSMC’s April sales data

The S&P 500 hovers near record highs as investors digest a week of significant market-moving news including earnings reports, Apple‘s AI search exploration, Federal Reserve decisions, and international trade developments. Despite these major headlines, the index ended relatively flat, suggesting markets needed a breather after the recent historic rally. The oscillator indicator correctly signaled this pause was due, though markets closed the week less overbought than they began.

Taiwan Semi’s strong sales signal AI boom continues: Taiwan Semiconductor Manufacturing Company reported impressive April sales figures that exceeded expectations, showing 22.2% month-over-month and 48.1% year-over-year growth.

• The results indicate the AI infrastructure buildout remains robust, though some purchases may have been accelerated to avoid potential tariff increases or trade policy changes.
• As Nvidia’s primary chip supplier, Taiwan Semi’s performance is generally considered a positive indicator for the GPU giant.

Nvidia’s China strategy takes shape: Despite trading lower Friday, Nvidia remains on track for a positive week amid reports about its China-compliant chip strategy.

• Reuters reported Nvidia plans to release a downgraded version of its H20 AI chips for China within two months, designed to comply with U.S. export restrictions.
• The stock showed minimal reaction to this news, likely because The Information published a similar story last week.
• Questions remain about how these modified chips will compete against local Chinese offerings from companies like Huawei.

The week ahead: Next week brings a lighter earnings calendar with roughly 9 S&P 500 companies reporting results.

• Key reports include Cisco, which will provide insights into enterprise technology spending, and Walmart, which will offer visibility into consumer spending patterns.
• Economic data will focus on inflation, with both consumer price index (CPI) and producer price index (PPI) reports scheduled for release.
• Additional data points include April retail sales and University of Michigan consumer sentiment and inflation expectations.