Taiwan Semi’s June Quarter Supports These Portfolio Holdings
Market conditions, including an overbought S&P 500, keep us cautious.
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The market is lower this morning following further headlines as Brazil promises to respond to President Trump’s 50% tariffs, noting a recently adopted law that authorizes the country to take proportional countermeasures in response to unilateral economic measures taken by other countries. While there are economic issues to contend with, especially given that Brazil sells fewer goods to the U.S. than it buys, the use of a U.S. tariff on a foreign country to stop a judicial proceeding is unprecedented and adds yet another layer of geopolitical uncertainty.
As we watch these developments and get ready for big bank earnings, the S&P 500 is back in overbought territory with a relative strength index (RSI) level of 70.23, and the Nasdaq Composite is knocking on that door with an RSI of 69.34. Meanwhile, the Volatility Index below 16 indicates a market filled with complacency, and the Fear & Greed Index is flashing “Extreme Greed.” When we’ve seen this combination before, it’s been a good time to tread carefully, and that is what we will do.
There are reasons to be selectively optimistic, however, especially with our AI-related holdings. This morning, Taiwan Semiconductor TSM reported its June revenue, which rose almost 27% year over year. That brought its Q2 2025 revenue growth to 39% year over year, and 11% higher compared to Q1 2025. Those figures help support the recent strength in Nvidia NVDA and Marvell Technology MRVL — and we digest TSM’s full Q2 2025 results and guidance next week, we’ll revisit price targets on those names, as needed. We’ll do the same for shares of Apple AAPL, Qualcomm QCOM, and Universal Display OLED as we get TSM’s updated end-market outlook.
Early Prime Day Results
As we move into the second half of Amazon’s AMZN Prime Day event that runs through Friday, July 11, Adobe Analytics estimates the company raked in $7.9 billion in U.S. sales on Tuesday. That makes it the "single biggest e-commerce day so far this year" per Adobe, and for those keeping score, it also eclipsed total online spending during Thanksgiving last year, when sales on the holiday reached $6.1 billion.
Our view is that the event will be a showcase for the intersection of our Cash-Strapped Consumer and Digital Lifestyle thematic models, and we continue to see Amazon benefiting from those dual tailwinds. While we’ve seen the headlines about initial Prime Day results, we’ll reserve judgment until we have data for the first two days, full well knowing the event is four days this year. To us, that means shoppers may be staging their purchases more than in past years. At the end of the day, it’s the final tally that matters when it comes to Amazon’s current quarter.
It's Not Easy Out There
But make no mistake, it’s not easy out there. Claire's Stores is considering a potential bankruptcy for its U.S. operations due to weak demand and higher import costs. Helen of Troy HELE missed June-quarter expectations with the management team saying tariff-related impacts made up “approximately 8 percentage points of the 10.8% consolidated revenue decline.” Also, ConAgra CAG organic net sales fell during its May quarter, and the company now expects its organic sales to be down 1% to up 1% this year as it factors higher costs and US tariffs into its outlook.
To that, we can also add the Visa’s V U.S. Spending Momentum Index (SMI), which fell 0.5 points month-over-month to 95.7 in June, marking the lowest reading so far in 2025. A 0.6-point drop in discretionary spending momentum from May to June drove the overall SMI decline. The non-discretionary SMI rose a more modest 0.8 points.
As we can see in the chart above, Visa’s SMI levels have continued to trend lower in Q2 2025. Comparing that against Costco’s COST adjusted comp sales figures for the period reinforces our decision to pick up more shares earlier today.
The net decline also supports our favoring American Express’s AXP membership-driven model over the more transaction-focused ones at Visa and Mastercard MA. Comments from Delta Air Lines DAL this morning about continued strength in international travel also keep us bullish on AXP shares. We look forward to more details on its pending Platinum card refresh when Amex reports its earnings on July 18, and odds are we will revisit our AXP price target as well.
At the time of publication, TheStreet Pro Portfolio was long NVDA, MRVL, AAPL, QCOM, OLED, AMZN, COST and AXP.
