Based on early reports related to artificial intelligence trading, Wall Street will need to stay on top of this earnings season. Taiwan Semiconductor, the world’s largest chipmaker, reported an impressive second quarter in which profits jumped 77% year over year. In Europe, ASML also reported second-quarter results that beat analysts’ expectations. Still, these numbers weren’t enough for investors to increase their positions in those names. TSM’s U.S.-listed shares fell 3% before the bell on Thursday after the company also raised its full-year spending outlook. ASML’s Amsterdam-listed shares also closed slightly lower on Wednesday. Despite their positive face value, these reports point to one common factor. That means the revenue bar is set very high this season. TSM 5D Mountain TSM 5-Day Chart Adam Crisafulli, founder of Vital Knowledge, said traders were “expressing disappointment with certain aspects” of Taiwan Semiconductor’s announcement. They also had “questions about the impact of further increases in capital spending budgets (historically, large increases in capital spending and production capacity are what cause cyclical stocks to fade rather than chase them).” Regarding ASML, Wells Fargo’s trading desk pointed to “low (North American extreme ultraviolet lithography) production capacity” in fiscal 2027 as a drawback. ASML is the only manufacturer in the world of EUV equipment used to manufacture chips. These weak stock prices also raise questions about what will happen if U.S. semiconductor companies begin reporting their earnings later in the season. Semiconductors have been the driving force behind driving the entire market to all-time highs. VanEck Semiconductor ETF (SMH) is up a whopping 64% for the year. But if TSM and ASML are any indication, companies like Nvidia and Micron Technology will need to achieve near-perfect results to stay in the semifinals.
