Shares of Broadcom (NASDAQ: AVGO), Taiwan Semiconductor Manufacturing (NYSE: TSM), and Arm Holdings (NASDAQ: ARM) closed down 2.2%, 2%, and 6.1% on Monday. Shares of Broadcom and TSMC were down even more during the day but recovered during trading.

All three of these companies are key suppliers to the Apple iPhone. Yesterday, a notable Asia-based Apple analyst wrote that initial orders for the iPhone 16 were weaker than expected. So, all three of these stocks fell in sympathy on the news.

So much for the iPhone “Supercycle?”

On Monday, TF International Securities analyst Ming-Chi Kuo wrote a blog post on Medium outlining a pessimistic early take on the iPhone 16. Kuo wrote that based on early channel checks with suppliers and pre-order data scraped from Apple’s websites, he estimates Apple’s first weekend preorder sales were just 37 million. That would be down 12.7% from last year, with the difference being lower “Pro” model preorders relative to 2023.

That may have surprised some who were expecting an iPhone “Supercycle,” due to the introduction Apple’s artificial intelligence (AI) platform, Apple Intelligence. However, Kuo points out that Apple Intelligence won’t be available at launch this month, so that could explain the low preorders for the Pro model. The first Apple Intelligence features won’t be available until the release of iOS 18.1 in October. And even then, all of the AI features discussed at the June WWDC conference likely won’t be available at that point.

In addition to the Apple Intelligence explanation, Kuo also believes a weak Chinese economy and intense domestic Chinese competition have played a role in tepid iPhone preorders. China accounted for 17.2% of Apple’s total revenue last quarter.

TSMC, the largest foundry in the world, makes Apple’s A-series phone processors, which are based on the Arm architecture. Broadcom also uses TSMC and designs the film bulk acoustic resonator (FBAR), Wi-Fi, Bluetooth, and fast-charging chips in the iPhone. So Apple is a key customer of all three companies. Hence the uniform downturn in shares Monday after each had a strong week last week.

iPhone rumors always abound this time of year

Before you abandon these stocks en masse, you should be aware this is the time of year when all sorts of Apple rumors and tea-leaf readings emerge from analysts based in Asia. Sometimes they turn out to be true, but other times, they don’t.

Furthermore, with short-term interest rates still high, consumers may be holding off on large-ticket purchases, like a new iPhone, unless necessary. Beyond deep-pocketed early adopters, it’s possible many are holding off on preordering a phone until they hear and see what friends and others are experiencing with Apple Intelligence. As noted, those features won’t be introduced until October.

Therefore, even if preorders are weak now, the rollout of Apple Intelligence and the likely interest rate cuts beginning this week could be catalysts for the iPhone later during the holiday season. So, I would regard yesterday’s news as noise. But should demand remain weak even after rate cuts and Apple Intelligence is introduced, that may be more of a reason to worry.

Meanwhile, each of these Apple suppliers also have strong AI growth potential outside the iPhone. Broadcom makes the key networking chips for AI data centers, as well as custom ASICs for several cloud giants’ self-designed AI accelerators. Arm was also upgraded last week on the prospects for increased edge AI data center penetration. Meanwhile, TSMC recently reported strong August sales figures, likely on the back of strong AI-related data center GPU orders.

The post Why Broadcom, Taiwan Semiconductor, and Arm Holdings Fell on Monday appeared first on The Motley Fool Canada.

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Fool contributor Billy Duberstein has positions in Apple, Broadcom, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Apple and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Shares of Palantir (NYSE: PLTR) rocketed 15.1% higher this week through Thursday trading, according to data from S&P Global Market Intelligence.

Palantir shot up Monday on news the stock would be added to the prestigious S&P 500 index. In addition, the company announced a five-year extension with oil and gas giant BP and hosted its fifth AIPCon, showing off the company’s AI platform.

A big achievement

The S&P 500 only admits certain companies that meet several criteria, including positive earnings over the past four quarters, a market cap that’s greater than $8.2 billion, and a decently liquid stock.

It’s a prestigious honor for Palantir, and now means investors in S&P 500 index funds will be forced to purchase its shares. That’s potentially good news for shareholders, as the three S&P 500 index funds from State Street, Vanguard, and Blackrock are the largest exchange-traded funds in the world. The bulk of Palantir’s gains came on Monday after the news was announced Friday.

Palantir also announced a five-year extension of its current engagement with BP this week. BP had already been a customer since 2014, using Palantir’s “digital twin” simulation for its oil and gas operations. Now with Palantir’s year-old AIP platform, BP will incorporate large language models (LLMs) into its workflows for better decision-making.

Speaking of AIP, which is Palantir’s AI-powered software that harnesses LLMs for tangible business outcomes, Palantir held its fifth AIPCon on Thursday. AIPCon saw over 100 commercial AIP customers attend, with a handful giving presentations as to how these organizations are benefiting from AIP.

Palantir is firing on all cylinders, but priced for it

The S&P 500 inclusion is a testament to Palantir’s recent success. However, is the stock a buy now?

Palantir now trades at over 33 times sales and 82 times its estimated earnings for next year. So, while the company is seeing an AI-powered acceleration, there isn’t much margin of safety in buying the stock at these prices.

The post Why Palantir Rallied Over 15% This Week appeared first on The Motley Fool Canada.

More reading

• How to Use a TFSA to Generate $363 in Monthly Tax-Free Income
• This TSX Dividend Stock Is Down 54% and Worth Holding for Decades
• Oil Is Plunging Today. These 2 Canadian Energy Stocks Are Built to Handle It.
• Canadian Companies With a Track Record of Consistently Raising Their Dividends
• TSX Today: What to Watch for in Stocks on Friday, April 17

Fool contributor Billy Duberstein has no position in any of the stocks mentioned. The Motley Fool recommends BP and Palantir Technologies. The Motley Fool has a disclosure policy.