To The Moon

Analysis of $ASML Holding NV(ASML)$ ASML and $Taiwan Semiconductor Manufacturing(TSM)$ TSMC: Navigating Cautious Guidance and Growth Potential

As of 11:00 AM NZST on Thursday, July 17, 2025, the discussion around ASML and TSMC, highlighted in this X post, raises intriguing questions about semiconductor industry dynamics. Here’s my take on the situation, based on the provided information and broader context, without real-time web searches.

ASML’s Performance and Cautious Outlook

ASML, a leading provider of photolithography equipment critical for chip manufacturing, reported strong Q2 results with total revenue of €7.7 billion and a net profit of €2.3 billion—both at the upper end of its guidance range. The company maintained its full-year outlook, projecting approximately 15% revenue growth and a gross margin around 52%. However, management’s warning that growth may stall in 2026 introduced uncertainty, causing the stock to initially rise 2% before falling 7%. This cautious guidance likely reflects concerns about softening demand, potential supply chain disruptions, or macroeconomic pressures, despite the robust Q2 performance. The market’s mixed reaction suggests investors are weighing short-term strength against long-term risks.

TSMC’s Momentum and the AI-Driven Boom

In contrast, TSMC, the world’s largest contract chipmaker, showcased resilience with a 39% year-over-year (YoY) surge in June sales. This growth signals a strong AI-driven data center boom, positioning TSMC for robust Q2 2025 earnings. The company’s leadership in advanced nodes (e.g., 3nm and 5nm processes) and its role as a key supplier to tech giants like Nvidia and Apple underpin this optimism. TSMC’s performance could overshadow ASML’s caution, especially if tomorrow’s earnings report delivers stronger guidance and reaffirms its dominance in the AI chip market.

Comparative Insights

The juxtaposition of ASML’s cautious stance and TSMC’s growth momentum highlights differing stages in the semiconductor value chain. ASML’s equipment sales depend on its clients’ capital expenditure plans, which may be tempered by 2026 uncertainties. TSMC, as a foundry, benefits directly from end-market demand, particularly in AI and high-performance computing. If TSMC’s earnings tomorrow exceed expectations—potentially driven by record AI chip orders—it could alleviate concerns raised by ASML’s outlook, boosting confidence across the sector.

Key Considerations

• Market Sentiment: ASML’s 7% drop indicates investor sensitivity to 2026 growth risks, while TSMC’s 39% sales jump reflects strong current demand. The market may look to TSMC to set the tone.

• Interdependence: ASML’s equipment is vital for TSMC’s production capacity. Any prolonged weakness in ASML’s guidance could eventually impact TSMC’s expansion plans.

• Tomorrow’s Catalyst: TSMC’s earnings report, due on July 18, 2025, will be pivotal. Stronger guidance could lift both stocks, while a conservative outlook might amplify ASML’s decline.

My View

I see this as a tale of two narratives within the semiconductor space. ASML’s cautious guidance reflects a prudent approach to an uncertain future, possibly signaling a maturing equipment market. TSMC’s surge, however, underscores the ongoing AI-driven demand, which could sustain growth through 2025. The critical question is whether TSMC can deliver a robust earnings report tomorrow to counterbalance ASML’s concerns. If TSMC exceeds expectations with clear 2025-2026 growth projections, it could stabilize the sector and potentially lift ASML. Conversely, if TSMC echoes ASML’s caution, it might signal broader industry headwinds.

For investors, this presents a mixed bag. TSMC appears better positioned for short-term gains given its current momentum, but ASML’s long-term value could recover if 2026 risks are overstated. I’d recommend monitoring TSMC’s earnings closely—strong guidance could be a buy signal, while weakness might warrant a wait-and-see approach for both stocks. The semiconductor rally may hinge on this outcome.