Three Stocks: Mastercard, SoundHound and Taiwan Semiconductor

Mastercard

Shares of Mastercard (MA) slumped 3% today after the stock was downgraded this morning.

Analysts at Bank of America downgraded the stock from a buy to a Hold, dropping their target price from $505 to $480.  The same analysts dropped their recommendation on Visa shares from a Buy to Hold.

The downgrade reflects Wall Street’s growing concern regarding the strength of consumers.  Just last month, the Federal Reserve Bank of St. Louis reported that credit card delinquencies have been on the rise.

The Federal Reserve Bank reported that credit card delinquencies have been on the rise in all income demographics, including the richest 10% of zip codes in the nation.  This has been reported along with the fact that many Americans are now extending the use of their credit cards as a way to deal with higher prices.

Mastercard shares have been on the decline since their recent highs in March.

Today’s news moved the stock below its 200-day moving average after running into staunch resistance from its 50-day moving average on Monday.  That 50-day moving average is in a bearish trend, which is likely to accelerate the stock’s selling pressure ahead of the company’s earnings report before the market open on July 25.

Long-term investors need to watch Mastercard shares as they approach the $400 price.  This round number support is also where the stock’s 20-month moving average trades.  A break below both would send shares into a long-term bear market trend.

MA Price Chart

SoundHound AI Inc.

Shares of SoundHound AI (SOUN) shot 20% higher today on product news from the company.

SoundHound AI announced that their “SoundHound Chat AI Voice Assistant” with integrated ChatGPT is now live and in production in Peugeot, Opel, and Vauxhall vehicle brands in 11 European markets including Austria, France, Germany, Italy, Spain, and the United Kingdom.

The headline comes after the company’s acquisition of Allset, an online restaurant ordering platform that connects customers with local restaurants.  The company plans to integrate the platform with their current technology to allow customers to order food from the phones, vehicles and other smart devices using an AI Assistant.

Shares of SoundHound are trading 50% lower than their 2024 highs which were posted in March.  That rally was driven by the news that NVDA had taken a small investment of less than 1% in the company.

Since then, the company has failed to follow through on wowing investors as the last earnings report only beat expectations slightly and management did not raise the current quarter expectations.

Call options on SoundHound traded with increased volume as investors are speculating on the stock’s break above $5 leading to a trend that could return the stock to the higher end of it’s 2024 trading.

Investors need to maintain a close eye on the $5 level as a move back below this key psychological price may spark selling from short-term traders.

Soun Price Chart

Taiwan Semiconductor

Taiwan Semiconductor (TSM) reported that June revenue increased 28% on a year-over-year basis early this morning.  The announcement has shares trading 3.5% higher at the close as the stock is set to post a new all-time closing high.

In April, the company issued a bullish outlook on their business based on strong demand for AI chips.  As a result, management sees their revenue from AI chips doubling in the fiscal year 2024.

The bright outlook sets the stage for Taiwan Semiconductor’s earnings report, due out next Thursday before the market open.  Last quarter, the company beat analyst expectations for earnings and revenue.  That strength, along with the company’s updates have analyst’s upgrading their outlook on the stock.

Taiwan Semiconductor’s price trends put the stock in a firm bull market trend from both the short- and long-term perspective.

Expect to see investors buying the rumor ahead of next week’s earnings which may create a short-term overbought condition on the stock ahead of the report.  That situation could cause shares to experience a “sell the news” trade shortly after earnings, which would be a well-timed opportunity to add shares to a portfolio.

TSM Price Chart