Key Highlights

● TSMC slipped as semiconductor stocks missed the tech rebound.

● It reports third-quarter results on Thursday, October 15.

● Nvidia eased $1.20 to $229.28 and AMD fell $12.58 to $608.10.

● Apple told suppliers to cut iPhone 18 Pro component output.

Taiwan Semiconductor Manufacturing (NYSE:TSM) slipped on Friday, October 9, according to market data, as semiconductor stocks failed to join a rebound in other parts of the technology sector. There was no company-specific news. The world's largest contract chipmaker is due to report third-quarter results on Thursday, October 15.

TSMC manufactures chips designed by other companies, including Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD) and Apple (NASDAQ:AAPL), which makes it a central supplier to the AI boom and a bellwether for the entire semiconductor industry. Its American depositary receipts trade on the New York Stock Exchange.

A tale of two tech trades

On Thursday, October 8, a report said that OpenAI's annualized Revenue was about $50 billion at the end of September, roughly $20 billion below a figure that had circulated earlier. That report hit AI-linked stocks hard. Nvidia, Broadcom (NASDAQ:AVGO) and AMD all fell sharply that day.

On Friday, a report said OpenAI expects to reach or exceed $70 billion by year-end, and investors returned to software and cybersecurity. Microsoft (NASDAQ:MSFT) rose $12.46 to $535.07 and Oracle (NYSE:ORCL) climbed $6.21 to $141.40. Chips did not follow. The PHLX Semiconductor index slipped, Nvidia eased $1.20 to $229.28, AMD fell $12.58 to $608.10 and Micron (NASDAQ:MU) edged lower to $1,029.00. Broadcom managed only a small gain.

Over the week, the semiconductor index fell while a software ETF rose solidly, and one weekly review described Leadership as moving out of the AI trade. Michael Monaghan, portfolio manager at Founder ETFs, said, "Chips have been this year's story". Deutsche Bank (NYSE:DB)'s George Saravelos offered a note of caution: "The biggest systemic risk in the market next year is not France but 'something going wrong' in the AI ecosystem".

Apple Supply chain in focus

There was also news from TSMC's biggest smartphone customer. Apple told suppliers to cut October component production for the iPhone 18 Pro models from original plans, citing weaker-than-expected demand. Apple fell $3.78 to $336.64, and radio-frequency chip supplier Skyworks (NASDAQ:SWKS) slid. No direct link between that report and TSMC's Friday move was established.

On the positive side for AI hardware, Lumentum (NASDAQ:LITE) chief executive Michael Hurlston said, "We are completely sold out, with no end in sight," lifting optical networking stocks.

The broader market

Wall Street finished higher. The S&P 500 rose 46.18 points to 7,811.54, finishing just shy of its record close. The Nasdaq Composite gained 172.83 points to 27,366.17 and the Dow climbed 423.31 points to 51,654.95. NYSE gainers outnumbered losers by about 1.65 to 1.

The 10-year Treasury Yield remained near a 24-year high, and the Fed raised rates in September for the first time since 2023. Markets will get fresh Inflation data next week.

Expectations into earnings

TSMC's report will be the first big read on AI Demand of the Earnings season. Investors will focus on its outlook for advanced chips used in data-center accelerators, any comments on customer orders, and capacity plans. The company's results often move chip stocks around the world, from Nvidia and AMD to equipment makers.

Analysts expect strong third-quarter earnings growth for the S&P 500, led by energy and technology.

TSMC's Outlook for Data-Center Chips Is the Key Read

TSMC reports on Thursday, October 15, the same day as Charles Schwab (NYSE:SCHW) and other banks. Before that, the September US Consumer Price Index is due Wednesday, October 14, with producer prices and retail sales on Thursday. Big banks begin reporting Tuesday, October 13. US stocks trade Monday, October 12, while the Bond Market is closed for Columbus Day, and the Fed meets October 27 and 28.