TSMC scales new heights, Constellation Brands: US markets this week

US markets made a positive start to 2026 with gains seen across the board and new all-time highs for the S&P 500 index and the small cap Russell 2000 index, which gained almost 4%.

Investors were bombarded with a raft of macroeconomic data which showed US services activity expanding in December at the fastest pace in more than a year, notching up the third consecutive month of expansion.

Private payrolls rebounded less than expected in December to 41,000 after declining by 32,000 in the prior month and weekly jobless claims inched up slightly less than expected to 208,000.

Government data showed the number of available job openings slid to a 14-month low in November while the number of layoffs remained muted, suggesting the labour market remained in a ‘no hire, no fire’ state.

TSMC

The world’s largest contract chip manufacturer, Taiwan Semiconductor Manufacturing Company (TSMC for short) gained after several leading analysts raised their price targets.

Among them was Goldman Sachs which set a new target equivalent to an ADR (American depository receipt – the vehicle through which TSMC trades on the US market) price of $466, implying 46% upside for the shares despite them jumping over 50% in the last 12 months.

Goldman Sachs lead analyst Bruce Lu said: “We view AI as a multi-year growth engine for TSMC, with capacity tightness expected to persist through 2027, as exponential growth in token consumption continues to keep silicon demand ahead of supply.”

Despite anticipated capacity expansion fuelled by TSMC’s heavy investment spending over the next three years, Goldman sees a structural improvement in margins supported by productivity gains.

TSMC revealed a 20.4% increase in revenue for the December quarter on 9 January, topping consensus analysts’ expectations, fuelled by strong demand for AI chips.

The company is scheduled to report fourth quarter earnings on 15 January.

Constellation Brands

Alcoholic beverages group Constellation Brands saw its shares rise after it reported third quarter sales and earnings ahead of market expectations.

The company benefited from improving demand for some of its popular beers including Corona and Sunbrew, helped by lower prices, defying a challenging market environment.

CEO Bil Newlands commented: “Our Beer Business delivered dollar and volume share gains in tracked channels and gained incremental distribution points, while our Wine and Spirit Business continued to outperform the U.S. wine industry.”

Net sales fell 10% to $2.22 billion for the three months to 30 November, beating analysts’ forecasts for a 12.4% decline while adjusted profit came in at $3.06 per share, ahead of the $2.63 expected.

Constellation Brands reaffirmed it expectation for net sales to decline by 4% to 6% for the year to the end of February 2026.

The company forecast full year earnings per share to be in a range of $9.72 to $10.02 compared with a prior expectation of $9.86 to $10.16. The shares have lost around a third of their value over the last year.

Banks

US investment banks are scheduled to kick-off the earnings season next week with analysts expecting another bumper performance driven by buoyant markets, a revival in mergers and acquisitions and an improving IPO (Initial public offering) calendar.

The largest US lender JPMorgan Chase will be first out of the traps on 13 January, followed by Citigroup, Bank of America and Wells Fargo the following day.

According to estimates from Dealogic global investment banking revenue increased 15% year-on-year to nearly $103 billion in 2025, making it the second-best year after 2021.

Analysts expect banks to benefit from broad loan growth and an expansion in net interest margins, which measures the difference between what a bank earns from loan interest and pays out on customer deposits.

Going into next week’s reports the S&P Banks index has risen by 15% over the last 12 months, just shy of the benchmark S&P 500 index gain of 17%.