Nvidia gets most of the stock market fanfare in the semiconductor category. However, Taiwan Semiconductor (TSM) has also been a stellar performer. The contract chip maker was recently awarded funds under the CHIPS and Science Act last November in a scramble by semiconductor companies to secure government subsidies ahead of the inauguration of President-elect Donald Trump.
The reported $6.6 billion awarded can certainly help add investment capital for TSM to keep its operations growing. The stock is up over 100% the past year, making single-stock ETFs like the Direxion Daily TSM Bull 2X Shares (TSMX) worth noting.
Part of the price gains surrounding semiconductors can be attributed to AI, which needs computing power from chips. That said, traders who don’t want to take on the inherent risk of concentrating on one stock can also look to play the whole industry via the Direxion Daily Semiconductor Bull and Bear 3X Shares (SOXL). The ETF includes the 30 largest semiconductor companies, including TSM.
CHIPS Act in Jeopardy?
Part of the rush to secure funding from the CHIPS Act is the incoming presidential administration under Donald Trump. President-elect Trump has been vocal on his disdain for the CHIPS Act, which could put its status in jeopardy.
“That chip deal is so bad, we put up billions of dollars for rich companies to come and borrow the money and build chip companies here, and they’re not going to give us the good companies anyway,” Trump said on the Joe Rogan podcast.
Processing power is a necessity for AI applications. Therefore, it’s difficult to say that policy changes could negatively affect TSM. However, if short-term price fluctuations skew towards the downside, then traders can also opt for the Direxion Daily TSM Bear 1X Shares (TSMZ). This is especially the case if geopolitical forces apply downward price pressure on TSM.
“Tariffs, trade restrictions, and the push for domestic semiconductor production in the U.S. are key factors that could shape its financial outlook under the Trump administration,” noted Direxion in their The Xchange newsletter.
Taking the inverse side of the trade allows for greater flexibility in the markets, leading to potential profit-taking no matter if the stock heads up or down.
When you spot a great trading opportunity, but don't have the funds ready. You can use contra trading limit to buy the stock immediately without upfront cash. Don't miss out on opportunities. It allows you to trade now and settle later with the Tiger Trade Cash Boost Account. Enjoy up to 7 days interest-free with a $20K credit limit. Plus, trade commission-free for up to 6 months. Good for short-term trading. Check it out for more details on Tiger Trade.
Comments