(Bloomberg) — Options traders in Taiwan Semiconductor Manufacturing Co. are facing a rising wave of pessimism following the chipmaker’s cautious guidance and concerns about whether the artificial intelligence trade is dissipating.
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Put option volume on the U.S.-listed chipmaker’s shares rose to the highest level since January on Friday, according to data compiled by Bloomberg. TSMC shares have fallen 13% over the past six sessions, erasing more than $100 billion in market value.
The world’s largest maker of advanced chips cut its expectations for 2024 semiconductor market growth – excluding memory chips – to around 10% last week. This added to a string of cautious news for a sector that has been flying high over the past year as enthusiasm for AI has grown, with some seeing the gains as overblown. Nvidia Corp. and Super Micro Computer Inc., two other industry darlings, tumbled on Friday.
While puts have increased, calls have also seen elevated activity, suggesting some traders see potential for a recovery. Open interest for call and put options on Friday was about 20% higher than 20-day average levels.
Cautious capital spending and the industry outlook have depressed TSMC sentiment, Morningstar analyst Phelix Lee wrote in a note on Friday. However, she added that “stocks remain attractive as AI-related demand continues to pleasantly surprise us and there is limited downside to sentiment for the automotive and industrial markets.”
–With assistance from John Cheng.
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