Nvidia Investors Need to Be Paying Attention on July 16

Written by Keithen Drury for The Motley Fool->

Taiwan Semiconductor Manufacturing (TSMC) is a major supplier for Nvidia.

Nvidia's stock has been relatively weak so far in 2026.

July 16 could be a very important day for investors in all sectors of the market. Taiwan Semiconductor Manufacturing (NYSE: TSM) (or TSMC) reports earnings on that day, and it will have implications beyond just its stock.

TSMC is the primary chip fabricator for nearly any company involved in the AI build-out and tech fields. If it raises a red flag that chip demand has fallen off a cliff, it could crash the stocks of many of the computing unit manufacturers, like Nvidia (NASDAQ: NVDA). On the flip side, if TSMC reports positive earnings and tells investors that business is continuing to ramp up, it could send shares of its peers rallying.

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Nvidia investors have been disappointed in 2026 because of lackluster performance. However, if TSMC reports strong earnings, I think it could be one catalyst the stock needs to send it higher.

TSMC isn't much for surprises. While most companies on the public markets wait until their earnings report to let investors know how much revenue they generated, TSMC announces it monthly. While we don't have June's revenue figures yet (and won't until after earnings), investors already know what occurred in April and May. In April, TSMC's revenue rose 17.5%, and in May it increased by 30.1%, in New Taiwan dollars.

Companies don't often report monthly revenue because the market can get wrapped up in slow or fast growth, but monthly revenue is highly affected by working days and when orders are placed. The information doesn't replace the quarterly results, which smooth out some of that effect. However, it shows that demand for chips is still strong and that TSMC continues to expand.

For the second quarter, Wall Street analysts expect 35% revenue growth, but they also expect guidance for 40% growth next quarter. If TSMC's results and guidance exceed expectations, the stock could soar, and pull Nvidia up with it.

There have been few stocks as disappointing as Nvidia during 2026. Its stock has lost to the broader market for the better part of the year, as measured by the S&P 500 (SNPINDEX: ^GSPC). However, it has closed the gap in recent days and is performing similarly right now. But if you look at its earnings results, you wouldn't think that was the case.

Last quarter, Nvidia's revenue rose a jaw-dropping 85% year over year. Next quarter, analysts expect 96% revenue growth. The reason for the hesitancy to send the stock higher is that the market is worried about the health of the AI build-out. There are growing questions about whether companies should be spending as much capital on AI data centers as they are, and that negative sentiment is affecting Nvidia's stock, even if the sentiment doesn't reflect the company's results.

Strong earnings and bullish language on its future from Taiwan Semiconductor will help change that notion, and if it does, Nvidia's stock could be ready to soar. It trades for a relatively cheap price tag of 22.8 times forward earnings, which is barely more expensive than the S&P 500 at 21.7, and far cheaper than TSMC at 27.5.

Nvidia is growing faster than TSMC and is projected to continue doing so. There aren't a whole lot of good reasons for TSMC to be valued at a premium to Nvidia, and that could leave the door open for Nvidia to rally to a 30 times earnings or so valuation. If that's the case, then there's nearly 50% upside in Nvidia's stock ready to happen at any given moment, making it a perfect stock to buy now before earnings season begins.

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Keithen Drury has positions in Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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