The pressure is now squarely on TSMC. ASML has effectively told the market that customers are still ordering advanced chipmaking equipment aggressively, with Q2 revenue and profit beating expectations and 2026 guidance raised to €43 to €45 billion. Even more importantly, management said AI customers continue to accelerate capacity expansion.
The question is no longer whether AI demand exists. It is whether TSMC can show that wafer demand is translating into sustained, profitable production.
There are four numbers I would watch:
2026 revenue guidance. Any increase would reinforce the AI investment thesis.
Capital expenditure. If TSMC raises capex again, it suggests customers such as Nvidia, AMD, Apple and Broadcom continue to reserve future capacity.
Gross margin. Investors want to see that pricing power remains intact despite rapid expansion.
3 nm and 2 nm utilisation. High utilisation would indicate advanced-node demand remains supply constrained.
The biggest risk is not missing Q2 estimates. The market already expects a record quarter. The risk is forward guidance. AI-related semiconductor stocks have rallied so strongly that merely meeting expectations may not be enough.
Ironically, TSMC has already reported an exceptionally strong quarter, with Q2 profit up 77% year on year, record earnings, higher 2026 capex guidance of US$60 to 64 billion, and management forecasting more than 40% revenue growth this year. Despite that, the shares still traded lower immediately after the announcement because investors focused on rising spending and lofty expectations.
My view
Bull case (≈65%): ASML and TSMC together confirm that AI infrastructure spending remains exceptionally strong. That would support the long-term outlook for Nvidia, SK Hynix, Micron, SanDisk and the wider semiconductor supply chain.
Neutral case (≈25%): Excellent numbers, but investors take profits because expectations have become extremely demanding.
Bear case (≈10%): TSMC cuts guidance or reports weaker utilisation, suggesting AI capacity expansion is slowing.
The key takeaway is that ASML sells the tools, while TSMC sells the manufacturing capacity. When both companies are simultaneously expanding guidance and investment, it is difficult to argue that AI semiconductor demand is collapsing. The more plausible debate is whether the market has already priced in too much optimism, rather than whether the underlying demand has disappeared.
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