Stocks Eye 7,700 as a TSMC Blowout Supercharges the AI Trade, With Retail Sales and Netflix on Deck

Georgi Kuzmanov Senior Equity Analyst & Founder Columbia MSFE · 13+ years equity research

The artificial-intelligence trade got its loudest confirmation yet. Taiwan Semiconductor, the foundry at the center of the entire chip supply chain, reported a blowout quarter overnight — record revenue and a raised full-year outlook, driven by what management called insatiable demand for AI accelerators — and lifted its capital-spending plan to meet it. Coming a day after Nvidia won a reprieve to resume China sales, it is the picks-and-shovels proof that the AI capital cycle is accelerating, not cooling. TSMC’s U.S.-listed shares jumped in premarket trading and dragged the semiconductor complex higher, putting the S&P 500 on course to test 7,700 for the first time. Futures are up about 0.25%, with the Nasdaq leading.

The advance builds on a market already at records. Wednesday’s benign June PPI confirmed the cool tone of Tuesday’s CPI, and together with a wave of bank-earnings beats it carried the S&P 500 to a fresh high of 7,678.40. The inflation scare that hung over the start of the week has, for now, given way to an earnings story — and the earnings, from the banks to the world’s most important chipmaker, keep beating.

But the session is not without its tests. At 8:30 a.m. the June retail sales report lands, the first major read on the American consumer this earnings season and the swing factor for whether the record run extends. And after the close, Netflix reports — the first megacap-adjacent name to face the market’s exacting growth bar. Strong chips and a resilient consumer would be a powerful combination; a soft retail print at these valuations would be the first real excuse to take profits.

Pre-Market Snapshot

Overnight Developments

TSMC blows past estimates on AI demand

The overnight headline belonged to Taiwan Semiconductor. The company reported record quarterly revenue, comfortably beat profit estimates, and — most importantly — raised its full-year revenue-growth guidance while lifting its capital-expenditure plan, all on the strength of AI-accelerator demand it described as showing no sign of slowing. As the sole advanced-node manufacturer for Nvidia, AMD and the rest of the AI complex, TSMC’s order book is the cleanest read on whether the trillions of dollars of AI enthusiasm are backed by real spending. The answer this quarter was an emphatic yes, and the stock’s premarket surge pulled the entire chip group with it.

Retail sales and jobless claims on deck

The macro focus shifts to the consumer at 8:30 a.m. June retail sales are expected to rise 0.3% on the month, a rebound from May’s soft 0.1%, and the report is the first hard look at whether household spending is holding up as the tariff agenda works through prices. Weekly jobless claims, expected near 240,000, will accompany it as a labor-market check, alongside the Philadelphia Fed’s manufacturing survey. For a market at records, a solid consumer print is the fundamental underpinning the rally needs.

UnitedHealth beats but flags costs; Netflix after the close

The earnings parade widened beyond the banks and chips. UnitedHealth topped profit estimates but struck a cautious tone on medical costs, keeping the managed-care group under pressure even on an up day. PepsiCo delivered a solid beat that reassured on the consumer-staples side. The marquee report comes after the close, when Netflix — the first of the megacap-adjacent growth names — posts results that will be scrutinized for subscriber momentum, advertising-tier growth and second-half guidance, setting the tone for the technology-heavy reports to follow.

Global Markets

Asian markets rallied on the TSMC result, with the chip supply chain leading. Taiwan’s Taiex surged about 2.2% as the foundry giant jumped, South Korea’s Kospi climbed roughly 1.1% on Samsung and SK Hynix, and Japan’s Nikkei 225 added 0.6% to near 72,300. China’s Shanghai Composite firmed 0.3% to around 4,150 and Hong Kong’s Hang Seng rose 0.7% to near 24,000. The AI-capex read-through from TSMC was the unambiguous driver across the region.

Europe opened firmer, led by its semiconductor names. ASML and the chip-equipment group climbed on the TSMC capital-spending signal, lifting Germany’s DAX about 0.3% to near 25,300, France’s CAC 40 0.3% to around 8,545, and the Euro Stoxx 50. Britain’s FTSE 100 added 0.2% to about 10,710. The tone was constructive, with the U.S. retail sales print the main event still ahead.

Macro and Rates

The bond market is calm after a benign inflation week. The 10-year Treasury yield holds near 4.33% and the 2-year near 4.01%, leaving the 2s/10s spread at a positive 32 basis points. With both the CPI and PPI having come in close to expectations, the immediate inflation worry has receded, and today’s retail sales report is more a growth signal than an inflation one. Futures still price better than a nine-in-ten chance of a hold at the July 29 meeting, and the Fed’s pre-meeting communications blackout begins this weekend.

The dollar is steady near 99.3 on the ICE index, gold is flat at $4,150, and crude firmed toward $69.10 for WTI. Bitcoin held above $70,000 as Congress advanced its digital-asset legislation, extending the crypto complex’s run. The cross-asset backdrop — steady yields, a firm dollar, buoyant risk appetite — is supportive, and unusually free of the tariff-inflation anxiety that dominated the week’s open.

Corporate News

Earnings & Analyst Actions

• TSMC (TSM): Blowout quarter with record revenue and a raised full-year outlook on AI demand; the capital-spending increase is the clearest validation of the AI-infrastructure trade.
• UnitedHealth (UNH): Beat on profit but flagged elevated medical costs, keeping managed-care sentiment cautious.
• PepsiCo (PEP): Topped estimates in a reassuring read on the packaged-consumer space.
• Netflix (NFLX): Reports after the close; ad-tier growth, subscriber trends and guidance are the keys as the first megacap-adjacent name to report.
• Semiconductors: Nvidia, AMD, Broadcom and ASML rose in premarket trading on the TSMC read-through and Wednesday’s China-sales reprieve.

Premarket Movers

Economic Calendar

The AlphaEdge Prediction

The path of least resistance is a push through 7,700, powered by the TSMC-led chip rally, provided the 8:30 retail sales report does not disappoint. Expect semiconductors to lead and the tape to hold its gains into the number, with the real two-sided risk arriving at the release and then again at the Netflix report after the bell.

Base case: A retail sales print in line at +0.3% lets the S&P 500 clear 7,700 and trade a 7,690–7,720 range into the close, with chips leading and the consumer read reassuring.

Bull case: A strong retail number paired with the TSMC momentum sends the index decisively above 7,700 toward 7,750, broadening the advance and setting up a constructive Netflix reaction.

Bear case: A soft or negative retail print, or profit-taking at records, stalls the advance and pulls the S&P back toward 7,620, with a weak Netflix guide after the close raising the risk of a softer Friday.

TSMC’s blowout is the hard, cash-backed proof the AI trade needed, and it has the chips carrying the S&P 500 to the doorstep of 7,700; but with the market priced for perfection at a VIX below 15, the record run now rests on the 8:30 retail sales report confirming the consumer is holding up — and on Netflix, after the close, clearing a very high bar — so lean with the trend while respecting how little disappointment this tape has priced in.

Georgi Kuzmanov

Senior Equity Analyst & Founder at AlphaEdge. Columbia University MSFE (2011–2013). Covering equities, macro, and geopolitics for serious investors.