What TSMC's April chips sales tell us about Nvidia and the AI investment trade

CNBC

09-05-2025

Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Market update: The S & P 500 was slightly lower on Friday. The muted action wraps up a week filled with major headlines: corporate earnings, Apple is exploring AI search and what that could mean for Google, a Federal Reserve meeting, a U.S. trade deal with the UK, and upcoming talks with China. Despite the flurry of news, the index ended the week pretty much at the same level as where it started, a sign that the market needed some time to digest its historic comeback over the past few weeks. We continue to point to the S & P Oscillator as the signal that indicated the recent rally was due for a pause. On the bright side, the market is going out the week less overbought than where it entered. TSMC's read-through to Nvidia : Shares of the world's largest semiconductor manufacturer Taiwan Semi were higher Friday after the company reported better-than-expected sales April sales — up 22.2% month over month and 48.1% year over year. These strong results suggest that the AI infrastructure ramp remains in full swing, though it's unclear if some of April's growth was driven by customers accelerating purchases to avoid tariffs or changes in trade policy. Taiwan Semi is Nvidia's primary chip supplier, so an increase in its sales is generally seen as a positive indicator for Nvidia as well. Nvidia traded lower on Friday, but is on pace for a positive week. On Friday, Reuters reported that Nvidia plans to release a downgraded version of its H20 AI chips for China in the next two months that are compliant with U.S. export restrictions. The stock probably isn't moving on this report because a similar story was reported by The Information last week. It also remains unclear how these dumb-downed chips for China stack up against local competition from Huawei, but our inclination is to say that customers will always take as many Nvidia chips as they can get. Other tariff and trade restrictions remain an overhang . A spokesperson for Nvidia declined to comment to the Club on the Reuters report. Next week : Earnings slow down next week with only about 9 companies in the S & P 500 scheduled to report and zero in the portfolio. The two most notable companies are Cisco and Walmart . Cisco's results will give us a view into the state of enterprise spending, while Walmart results will tell us how consumer spending is holding up. On the data side, it's inflation week with both the consumer price index (CPI) and producer price index (PPI) reports. We'll also see April retail sales and University of Michigan consumer sentiment and inflation expectations. (See here for a full list of the stocks in Jim Cramer's Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. Nvidia CEO Jensen Huang speaks during the Hill & Valley Forum at the US Capitol Visitor Center Auditorium in Washington, DC, on April 30, 2025.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street.