While fears of fatigue in the AI space have grown in recent weeks, the start of earnings season is pushing that idea off, at least for now. That’s because AI-related companies are reporting strong earnings.
Even better, companies are reporting strong sales. Since earnings can be cleverly adjusted by accountants, sales indicate raw cash flow before any potential accounting shenanigans. And with sales still soaring in the chip space, the sector isn’t quite ready to trend back down yet.
Semiconductor manufacturer Taiwan Semiconductor (TSM) gave chip stocks a boost this week, allowing the markets as a whole to soar to new highs. TSM reported a surge in sales, indicating that the semiconductor trend isn’t over yet.
TSM shares are now up 79% over the past year. That’s not as steep as some other players. And with sales still surging, the stock isn’t too expensive at 30 times forward earnings.
Action to take: Investors may like shares here, as the price may rise significantly higher before the next potential pullback. TSM also pays a 1.3% dividend at current prices.
For traders, the September $210 calls, last trading for about $7.50, could see mid-double-digit returns over the coming months if shares continue their current uptrend.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.