I guess we want to see the bottom is in when they lower guidance the prices go up.
Not sure if this stock price cycle will respond similarly to cycles caused by normal economic cycles and semiconductor industry gluts. In semis pre-tarriff tantrum......
- cell phones and PCs were experiencing a Q4 2024 and Q1 2025 modest slump, which was expected to be followed by modest growth throughout 2025.
- industrial and analog was at the tail end of a 6-8 quarter demand decline. ADI had pulled out of sales decline two quarters ago, and the rest of them (MCHP, TXN, ON, etc.) were likely to do the same this quarter or perhaps next. THIS area was at the bottom.
- AI was just growing rapidly, and we all know that story - NVDA, AVGO, MRVL - the issue here was not product demand but stock valuation.
And then the tariffs hit. And then the higher tariffs hit. And then some of the higher tariffs were postponed.
Now, suddenly, we got massive uncertaintly, 10% tariffs on everything, most reciprocal tariffs suspended for 90 days, tariffs on China other than exempted electronics enough to make US - China trade go to about zero, the threat of higher tariffs on other countries after the 90 days, or maybe not. The result of this uncertaintly is probably every company that uses semis in their products is manufacturing as much as possible to try to build inventory as much as possible and get it INSIDE THE USA before the 90 day expiration kicks in, and then who knows what happens? In other words, demand for semis right now is ramping in effort to create a huge inventory issue down the road, because (perhaps) that's better than paying a big tariff down the road.
Semi companies who are in the past ten days seeing orders INCREASE and expedited in order to "BEAT THE TARIFF" know that they are just building more inventory than required, and that a subsequent slump must follow, well......how are they going to guide lower in the face of increased demand?
This is why TSMC says it has seen ZERO evidence that their customers are cutting orders due to tariffs. More likely customers are ramping near term orders to try to beat future tariffs, which they think may be painful.
In conclusion, I got no idea what to do. |
