TSMC, SK Hynix, Tencent eyed as July Asian rally leaders

Analysts identify Taiwan Semiconductor Manufacturing Co., SK Hynix and Tencent as potential leaders of a narrow Asian market rally in July, citing upcoming company events and recent results as near-term catalysts.

Market participants have reduced broad bets on all AI-linked stocks after a sharp pullback in chip names. Shares of a major chipmaker fell 6.9% in recent trading, highlighting volatility in the sector and increasing focus on firms with clear earnings or demand signals.

TSMC is the most prominent of the three for investors seeking exposure to AI infrastructure. The foundry is scheduled to report second-quarter results on July 16. Citi analyst Laura Chen placed TSMC on an “upside 30-day catalyst watch,” kept a Buy rating and set a NT$3,800 price target, citing continued demand for advanced AI chips and tight supply in advanced nodes and packaging. UBS analyst Sharon Lin raised the firm’s target to NT$3,400 from NT$3,000 and increased capital expenditure forecasts for 2026–2028, saying higher investment should ease customer concerns about limited supply. Analysts note valuation is a constraint because the stock already reflects strong AI expectations.

SK Hynix offers exposure concentrated on memory products used by AI chipmakers, including high-bandwidth memory. The company reported record first-quarter results with revenue of 52.5763 trillion won, operating profit of 37.6103 trillion won and net profit of 40.3459 trillion won. SK Hynix plans to raise about $28 billion through Nasdaq depositary receipts, with proceeds earmarked for local chip factories and equipment purchases, including extreme ultraviolet scanners from ASML. Charu Chanana of Saxo Markets noted the ADR will test global investor appetite for memory-focused AI investments.

Tencent provides technology exposure less tied to semiconductor swings. The company reported first-quarter revenue of 196.5 billion yuan, a 9% year-on-year increase. Domestic gaming revenue rose 6%, international gaming increased 13%, and online advertising grew 20% to 38.2 billion yuan, with the company using AI to improve ad targeting. Barclays raised its price target for Tencent to $106 from $102 after the quarter and described the results as solid amid continued AI investment. Analysts highlight risks including the high cost of AI spending, ongoing regulatory review in China and U.S. restrictions on certain chips that could affect parts of the business.

Analysts and investors say selectivity has become the dominant theme entering July. Upcoming events-TSMC’s July 16 earnings report, SK Hynix’s Nasdaq offering and Tencent’s follow-up on advertising and gaming performance-will supply new data on demand, revenue and capital spending for investors assessing leadership within the market rally.