ASML and TSMC Earnings Put AI, Semiconductor, and Tech Spending in Focus

Two important semiconductor companies report earnings this week, giving investors clarity on whether the artificial intelligence spending boom remains strong enough to support elevated tech valuations.

ASML Holding (ASML) reports Wednesday Oct. 14, followed by Taiwan Semiconductor Manufacturing Company (TSM) on Thursday, Oct. 15. They are the “picks and shovels” of the tech and AI trade and increased spending by tech companies historically has helped these companies. ASML makes the lithography systems used to print microscopic circuitry, while TSM manufactures advanced chips designed by customers including Nvidia (NVDA), Advanced Micro Devices (AMD), Broadcom (AVGO) and Apple (AAPL) among others.

ASML is the world’s only supplier of extreme ultraviolet lithography systems, equipment that is essential for producing leading-edge processors, AI accelerators and high-bandwidth memory. ASML's advanced extreme ultraviolet (EUV) and High-NA EUV lithography machines typically cost up to $400 million per unit, depending on the model and configuration. ASML management guidance last quarter pointed to third-quarter revenue of €11 billion to €12 billion range and about 55% above a year earlier. The company guided to a gross margin of 55% to 57% for the quarter. Net bookings may be what investors focus on this quarter along with commentary on 2027 capacity, to confirm that chipmakers are still expanding aggressively. ASML ADRs are up nearly 64% this year as of Thursday’s close, but down 12.5% from their all-time high at the end of June. The option market is pricing in a possible +/- 4.9% one-day move post earnings (+/- $83).

Taiwan Semiconductor sales data, released monthly, add up to record third-quarter revenue of about NT$1.49 trillion, or roughly $46.7 billion, up about 51% from a year ago and above the top of its $44.6 billion to $45.8 billion previous guidance. Analysts expect net profit to rise about 65% to roughly NT$746 billion. As the world’s leading contract chipmaker and the primary manufacturer for tech giants like Nvidia, the company has seen its shares rally 46% this year. TSM’s ADR shares hit an all-time high of $487.47 last week but have pulled back nearly 9% since. The option market is pricing a possible +/- 3.5% one-day move of $15 as of this morning.

For the broader tech and AI trade, the two reports may provide clarity for investors as the companies are bellwethers for the sector. Both companies are investing heavily to increase capacity for customers, but supply remains strained. Taiwan Semiconductor alone is spending $265 Billion to build out its Arizona facilities. Investors may look past recent strong numbers and focus intensely on future guidance and capital expenditure expectations through 2027, specifically focusing on whether large cloud companies are sustaining their massive artificial intelligence infrastructure spend or starting to delay equipment orders.

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