What Is Going On With Taiwan Semiconductor Stock On Tuesday?

Analog Devices ADI shares have soared 29% over the past year, outperforming the Zacks Semiconductor - Analog and Mixed industry’s return of 24.7%. This outperformance reflects the benefits of its portfolio strength and strategic partnerships, which are driving its momentum across various end-markets like industrial, automotive, consumer and communications.

Analog Devices’ efforts to integrate artificial intelligence technology into products to deliver enhanced customer experience are a plus. Investments in technology and business innovation and increasing power design wins are other major positives, which are impacting the stock positively.

Analog Devices, Inc. Price and Consensus

Analog Devices, Inc. price-consensus-chart | Analog Devices, Inc. Quote

Strategic Collaborations to Boost ADI’s Prospects

ADI’s strategic partnership with India’s Tata Group to boost the latter’s electronic manufacturing ecosystem marks a significant achievement. Tata Electronics, Tata Motors and Tejas Networks signed a Memorandum of Understanding with ADI to use its products in Tata applications mostly in electric vehicles and network infrastructure.

Analog Devices partnered with Flagship Pioneering to facilitate a fully digitized biological world. This collaboration combines ADI's engineering expertise in analog and digital semiconductors with Flagship Pioneering's proficiency in applied biology to promote the discovery of biological insights, new and enhanced measurements, diagnostics and novel interventions.

ADI’s latest collaboration with Honeywell HON to digitize commercial spaces without replacing existing wiring, reducing costs and downtime is a notable development.

Analog Devices has also teamed up with Taiwan Semiconductor TSM to secure long-term wafer capacity via Japan Advanced Semiconductor Manufacturing. This partnership, while ensuring a stable chip supply and facilitating rapid scaling and increased output to meet customer needs can be beneficial for ADI.

Analog Devices and BMW Group’s announcement of early adoption of E²B, ADI's 10BASE-T1S Ethernet to the Edge bus technology within the automotive industry, is a noteworthy development. BMW will leverage ADI’s E²B for ambient lighting system design in its vehicles.

Analog Devices Suffers Persistent Headwinds

Despite having a diverse portfolio and strategic alliances, macroeconomic challenges still pose a risk. Geopolitical tensions and recessionary fears are major negatives.

Rising competition from industry players like Texas Instruments TXN, which is also making concerted efforts to integrate generative AI capabilities into its products, remains a major concern. Texas Instruments’ growing investments in new growth avenues, strong portfolio and advanced technology infusion are driving its prospects.

So far this year, Texas Instruments launched several products, including the DLPC8445 display controller — a new, compact solution for 4K UHD projectors. It enables ultra-small, high-performance projectors for gaming and AR glasses, delivering sub-millisecond latency and frame rates up to 240Hz.

ADI Offers Dim Q4 Guidance

For fourth-quarter 2024, ADI expects revenues to be $2.40 billion (+/- $100 million), suggesting an increase of 4% sequentially at the midpoint. The Zacks Consensus Estimate for the same is pegged at $2.40 billion, indicating a decline of 11.6% year over year.

ADI anticipates a non-GAAP operating margin of 41% (+/- 100 bps).

The company expects the Industrial and Consumer end markets to increase, Communications to be flat and Automotive to decrease at the midpoint on a sequential basis.

The company expects non-GAAP earnings to be $1.63 (+/- $0.10) per share. The consensus mark for the same is pegged at $1.63 per share, unchanged over the past 60 days, suggesting a year-over-year fall of 18.9%.

ADI’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 4.4%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Zacks Rank and Valuation

ADI shares currently have a stretched valuation, as suggested by a Value Score of D.

Analog Devices stock is trading with a forward 12-month Price/Sales of 10.61X compared with the industry’s 7.64X.

ADI currently carries a Zacks Rank #4 (Sell), implying investors should sell the stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research

The “Trump-related everything rally” reignited across markets on Monday, with heightened focus on last week's top performers like small caps, financials, Tesla Inc. , and cryptocurrencies, all surging as the new trading week began.

The Russell 2000 Index outperformed major large-cap indices, nearing a retest of its all-time high from November 2021.

Financials shone brightest again, with both large and regional banks posting strong gains. The SPDR S&P Regional Banking ETF surged 3.9%, reaching levels last seen in August 2022.

Bitcoin also dominated headlines, surpassing the $85,000 milestone and fueling widespread gains across other crypto assets.

Major crypto-related stocks, including Coinbase Global Inc. , rallied nearly 22%, hitting highs last seen in late November 2021. MARA Holdings soared 25%, with Riot Platforms Inc. and CleanSpark Inc. (NASDAQ:CSLK) both up by 21%.

Within tech, Tesla continued its rally, while the rest of the sector lagged, weighed down by sharp declines in semiconductors following new AI-related export restrictions to China, impacting Taiwan Semiconductor Manufacturing Company .

Elsewhere, the U.S. dollar extended its gains, while Treasury yields held steady, with the 10-year yield hovering around 4.3%.

Prices tumbled in commodities, with the exception of natural gas, which rose roughly 10%. Gold dropped over 2%, and oil fell by 3%.

Monday’s Performance In Major US Indices, ETF

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust held steady at $598.43.
• The SPDR Dow Jones Industrial Average rose 0.7% to $443.23.
• The tech-heavy Invesco QQQ Trust Series inched 0.3% lower to $512.45.
• The iShares Russell 2000 ETF rose 1.6% to $242.00.
• The Financials Select Sector SPDR Fund outperformed, rising 1.8%. The Technology Select Sector SPDR Fund lagged, down 0.8%.

Monday’s Stock Movers

Stocks reacting to earnings reports were Monday.com ltd down 15% and Aramark , up 1%.

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Chip stocks including Nvidia Corp , Broadcom Inc , Intel Corp , Arm Holdings plc , Advanced Micro Devices, Inc Credo Technology Group Holding , Lattice Semiconductor Corp , Microchip Technology Inc , Marvell Technology, Inc , MACOM Technology Solutions Holdings , Micron Technology, Inc , Qualcomm Inc , Qorvo, Inc , United Microelectronics Corp are trading lower Monday in sympathy with contract chipmaker Taiwan Semiconductor Manufacturing Co .

Taiwan Semiconductor stock took a hit after the U.S. Department of Commerce instructed the chipmaker to cease supplying China with sophisticated chips—of 7 nanometers or more advanced designs—that support AI and graphics processing capabilities.

The U.S. move sent jitters across the sector, anticipating further actions from President-elect Donald Trump’s administration, which had previously attacked the U.S. Chips Act and Taiwan, the hometown of Taiwan Semiconductor.

Also Read: Monday.com Stock Tanks Despite Q3 Beat, Raised Outlook