Next week on the stock market

Sainsbury’s put in an impressive showing in the run-up to Christmas. The supermarket managed to scoop up market share thanks to its efforts to sharpen its proposition at both the value and premium end, with its Taste the Difference range recording double-digit growth. In next week’s full-year results, the group expects underlying retail operating profits to grow around 7% to just over £1bn.

Sainsbury's has previously flagged that changes to employers’ National Insurance would add around £140mn of annual costs, and that’s before the impact of hikes to minimum wages. With those changes having just come into effect, we’re keen to hear how management plans to offset their impact on the bottom line. And thanks to its ownership of Argos, Sainsbury’s has more exposure than most of its peers to general merchandise. But sales here haven’t been faring well as customers prioritise the essentials, and we don’t see that trend reversing in the near term.

ASML is set to report its first-quarter results next week. The group expects revenue to land in the €7.5-8bn range, representing 46% year-on-year growth at the midpoint. Growth’s being driven by increasing demand for its chip-making systems, as major customers like TSMC, Samsung, and Intel rush to meet the rising need for high-performance semiconductors used in AI and other applications.

However, recent geopolitical developments could pose challenges for ASML. The group’s already had to navigate restrictions on the sale of its technology to China, which was a key sales region last year. With political relations seemingly souring, there could be more restrictions on exports ahead, which would likely weigh on performance. The impressive €36bn order backlog offers some reassurance in terms of revenue visibility in the near term, and we’ll be keeping an eye out to see if there’s been any growth in the backlog next week.

TSMC’s production has been impacted by a recent earthquake in Taiwan, and the company now expects revenue to be at the lower end of its $25.0-25.8bn guidance range when it reports first-quarter results next week.

No structural damage was caused to the group’s production sites, so despite the near-term challenges, TSMC remains positive about its full-year outlook. Growth in AI chip demand continues to drive TSMC’s performance. Nvidia’s orders for its new Blackwell GPUs play a key role, and the overall AI-related revenues are expected to double in 2025.

To help diversify production outside of Taiwan, the group’s committed $165bn to set up shop in the US. We’re keen to know more about the timelines of these projects and whether their production efficiency is comparable to Taiwan’s. While semiconductor exports remain exempt from recent tariffs, concerns about rising manufacturing costs and supply chain disruptions could weigh on performance.