Every AI Chip Runs Through TSMC. Trade the April 16 Earnings Report With Leverage

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Taiwan Semiconductor Manufacturing Co. (TSM) sits at the center of one of the most important structural stories in the semiconductor market. TSMC manufactures chips under contract for many of the largest AI companies, including NVIDIA (NVDA) , AMD (AMD), Apple (AAPL), Broadcom (AVGO), and Qualcomm (QCOM).

The surging demand for chips and AI infrastructure is becoming increasingly visible in TSMC's recent U.S. expansion. The company is building a series of semiconductor fabrication facilities, known as fabs, in Arizona. These plants allow major technology companies to source chips from U.S. soil, reducing their exposure to geopolitical risk around Taiwan and giving them supply that domestic policy increasingly favors. 

The fourth planned Arizona facility, Fab 4, is already fully committed through late 2027 before construction has even started. Customers have agreed to production quotes running 25% to 30% above equivalent pricing in Taiwan to secure that capacity. 

TSMC reports first-quarter 2026 results on April 16 before the market opens. The stock is up over 10% year-to-date and 100% over the past year, and consistently experiences periods of intense volatility around earnings. For traders with a view on where TSM heads into and out of that report, the Direxion Daily TSM Bull 2X and Bear 1X ETFs (TSMX) & (TSMZ) provide leveraged exposure on both sides.

Q1 2026 Earnings Expectations: Wall Street Is Bullish, But The Stock Has Pulled Back

Wall Street expects TSMC to report earnings of $3.27 per share for Q1, representing more than 54% growth compared to $2.12 in the same quarter last year. That projection follows four straight quarters in 2025 where TSMC beat estimates, with beats ranging from 4% in Q1 to more than 11% in Q4.

The stock has a 60-month beta* of 1.34, meaning it tends to move more than the broader market in both directions. That baseline sensitivity, combined with an earnings date that arrives after a month of selling pressure, sets up April 16 as a meaningful catalyst in either direction.

TSMC stock has slid roughly 8% over the past month despite a consistent streak of beats heading into 2026. Of 18 analysts covering the stock, all 18 rate it a Buy or Strong Buy. The consensus price target implies meaningful upside from current levels, with the Street-high target at $520.

Analysts consistently point to TSMC's dominant position in advanced chip manufacturing, its ability to raise prices as demand outpaces supply, and the long-term visibility that comes from having customers commit to capacity years in advance. The recent pullback, without any corresponding deterioration in those fundamentals, creates the kind of asymmetric setup traders look for ahead of a binary event.

Trade TSM Earnings With Direxion's Leveraged Single-Stock ETFs

The Direxion Daily TSM Bull 2X and Bear 1X ETFs offer two ways to trade TSM around the April 16 report. It is important to note that while TSMX is a 2X leveraged bull fund, TSMZ is a 1X inverse fund, not a 2X inverse fund.

Bullish Trade: TSMX

Direxion Daily TSM Bull 2X ETF (TSMX) is built for traders seeking to double their daily exposure to TSM's price movements. TSMX seeks daily investment results, before fees and expenses, of 200% of the performance of TSM.

• Targets 200% of TSM's daily performance
  • When TSM rises 1%, TSMX aims for a 2% gain (before fees)
  • When TSM falls 1%, TSMX aims for a 2% decline (before fees)
• Aims to suit traders expecting TSMC to beat Q1 estimates, raise guidance, or signal continued AI chip demand strength heading into the second half of 2026

Bearish Trade: TSMZ

Direxion Daily TSM Bear 1X ETF (TSMZ) provides inverse exposure to TSM on a one-to-one daily basis, moving in the opposite direction of the stock without amplification. TSMZ seeks daily investment results, before fees and expenses, of the inverse performance of TSM.

• Targets 100% of the inverse of TSM's daily performance
  • When TSM drops 1%, TSMZ aims for a 1% gain (before fees)
  • When TSM rises 1%, TSMZ aims for a 1% decline (before fees)
• Targets traders anticipating a guidance miss, margin pressure from U.S. fab costs, or a broader semiconductor pullback following the report
• Offers a tactical hedge on existing TSM or semiconductor exposure accessible in retirement accounts where traditional shorting* is restricted

Both funds reset daily and are designed for short-term tactical positions rather than long-term holds.

TSMC heads into April 16 having beaten estimates in every quarter of 2025, with a business that continues to benefit from AI chip demand that its customers are committing to years in advance. The recent pullback in the stock, without a corresponding change in those underlying conditions, sets up the earnings date as a potential catalyst to close that gap.

That is exactly the kind of setup TSMX and TSMZ are built for. Traders who want to act on a directional view on TSM without managing margin or borrowing shares can use these funds to express that conviction, long or short, in a single trade.

*Beta: Beta is a widely used indicator of a stock's price volatility or the level of risk relative to the broader market.

*Short selling: Short-selling is a trading strategy where investors borrow shares and sell them, hoping the stock price will fall.

The Funds do not seek to achieve their stated investment objective for a period of time different than a trading day. Investing in a Direxion Shares ETF may be more volatile than investing in broadly diversified funds. The use of leverage by the Fund increases the risk to the Fund. The Direxion Shares ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk and the consequences of seeking daily leveraged investment results and intend to actively monitor and manage their investment.  

Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in TSM.

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

Taiwan Semiconductor Manufacturing Co., Ltd. Investing Risk – TSM faces risks associated with the highly competitive nature of the semiconductor industry; economic and market uncertainty; reductions in demand for its products; potential concentration of revenues in a few large clients as among other risks.

Semiconductor Industry Risk – Semiconductor companies may face intense competition, both domestically and internationally, may have limited product lines, markets, financial resources or personnel and may face risks related to the availability of materials.

Technology Sector Risk — The market prices of technology-related securities tend to exhibit a greater degree of market risk and sharp price fluctuations than other types of securities.

Distributor: ALPS Distributors, Inc.

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