ASML and TSMC Earnings Validate AI Capex Thesis as Taiwan Risk Premium Rises

ASML reported Q1 2026 net sales of €8.8 billion and raised full-year revenue guidance to €36–40 billion, while TSMC’s 58% net profit jump on 35% revenue growth validates multi-year AI infrastructure demand despite mounting geopolitical headwinds.

The dual earnings beats — ASML posted net profit of €2.8 billion versus €2.54 billion consensus, TSMC delivered revenue of NT$1,134.1 billion (~$35.7 billion) at the high end of January guidance — provide the clearest data point yet that hyperscaler AI Capex remains on track to hit Futurum Research’s $660–690 billion projection for 2026. TSMC revised 2026 capex guidance to the high end of its $52–56 billion range, a roughly 30% increase from $40.9 billion in 2025, according to the earnings call transcript. That signals customer demand visibility extending into 2027–2028, even as the Iran Conflict’s closure of the Strait of Hormuz since March 4 now threatens energy and critical materials supply chains that underpin Taiwan’s semiconductor output.

Memory Shift Drives ASML Guidance Raise

ASML’s upward revision to €36–40 billion full-year revenue (midpoint €38 billion, up 5.3% from the prior €34–39 billion range) reflects accelerating memory capacity expansion, according to the official press release. Memory sales jumped to 51% of Q1 new tools revenue, up from 30% in the prior quarter, with South Korea accounting for 45% of sales and Taiwan 23%. The shift marks a structural change: memory makers, after years of underinvestment, are now racing to meet HBM (high-bandwidth memory) demand from AI accelerators. ASML maintained gross margin at 53.0%, the high end of guidance, and expects 51–53% for full-year 2026.

CEO Christophe Fouquet stated that “demand for chips is outpacing supply” and customers are “accelerating their capacity expansion plans for 2026 and beyond, supported by long-term agreements with their customers.” ASML targets delivery of 60+ Low-NA EUV systems in 2026 and 80+ in 2027 if customer demand supports it, according to Markets Daily coverage of the earnings call. Yet the stock fell 5–6% on April 15 despite the beat, with Ben Barringer of Quilter Cheviot noting “the market was a little bit ahead of them” — a signal that guidance raises were already priced in and export control headwinds to China (33% of 2025 sales, expected to drop to 20% in 2026) remain a drag.

TSMC Margin Expansion and Leading-Edge Dominance

TSMC’s Q1 gross margin of 66.2% surpassed guidance of 63–65%, with the company projecting Q2 margins of 65.5–67.5%. CFO Wendell Huang set a long-term gross margin target of “56% and higher through the cycle” with return on equity in the “high 20s percent,” per 24/7 Wall St. The margin expansion reflects pricing power on leading-edge nodes: 3-nanometer process accounted for 25% of Q1 wafer revenue, and advanced nodes (3nm plus 5nm) now exceed 60% of total wafer sales. March 2026 single-month revenue of NT$415.19 billion marked the highest March on record, up 45.2% year-over-year and 30.7% month-over-month, according to Techi.

The capex revision to $52–56 billion (70–80% allocated to leading-edge process, ~10% to specialty tech, 10–20% to advanced packaging) signals TSMC expects AI accelerator revenue to grow at a 54–56% CAGR from 2024 to 2029, up from prior estimates of 45%. AI chips now represent 17–19% of wafer revenue, and the company forecasts full-year 2026 revenue growth of ~30% in USD terms. TSMC controls roughly 70% of the global foundry market and produces ~90% of the world’s most advanced Semiconductors, making it the most concentrated choke point in AI Infrastructure supply chains.

Strait of Hormuz Closure Threatens Critical Inputs

The earnings optimism collides with a hard reality: the Strait of Hormuz has been effectively closed since March 4, and Qatar helium production is down ~30%, with spot prices up 40–100%, per HeyGoTrade. Helium is irreplaceable in semiconductor manufacturing — used to cool equipment during chip production and prevent oxidation. In 2023, the Semiconductor Industry Association warned that any helium supply disruption would “likely cause shocks to the global semiconductor manufacturing industry,” according to CNBC.

Taiwan imports 97% of its energy, with 37% of the power grid running on Middle Eastern LNG. Current LNG reserves last only 11 days without imports. The concentration risk is acute: if the Strait remains closed for more than six months, memory makers (which consume more helium per wafer than logic fabs) face margin compression from rising input costs and potential yield degradation. SK Hynix, Micron, and Samsung — all heavily exposed to HBM production — are most vulnerable. TSMC’s leading-edge fabs use less helium per unit of output due to higher wafer utilisation efficiency, providing some insulation, but extended disruptions would still force cost pass-throughs to hyperscaler customers.

Portfolio Implications: Selective Plays in Semis

The earnings data points to a bifurcated semiconductor investment thesis. ASML and TSMC’s dominance in EUV lithography and leading-edge foundry, respectively, creates structural moats that make them defensible even if macro conditions deteriorate. ASML’s 2026 guidance raise validates that customers with long-term AI infrastructure commitments (hyperscalers, sovereign AI initiatives) are willing to lock in capacity regardless of near-term geopolitical noise. TSMC’s margin expansion and capex increase confirm that leading-edge pricing power remains intact, and the 28% dividend raise (announced alongside earnings) signals management confidence in free cash flow generation through 2027.

Memory plays face a more complex calculus. Helium and bromine supply constraints (bromine, used in photoresist chemicals, also flows through the Strait) create input cost headwinds that memory makers cannot fully pass through due to competitive dynamics in commodity DRAM and NAND markets. However, HBM — where SK Hynix and Micron hold pricing power due to tight supply — offers partial insulation. The tactical trade is to overweight logic and equipment (ASML, TSMC) while selectively holding memory exposure through HBM-levered names, avoiding broad-based memory commodity bets until helium supply stabilises.

What to Watch

TSMC’s Q2 2026 guidance, due within days, will clarify whether the high-end capex assumption holds or if another upward revision is coming — the company has historically raised capex multiple times within a year as demand accelerates. Monitor helium spot prices and Taiwan LNG inventory levels weekly; any decline below 10 days of reserves would force emergency rationing and potential fab downtime. ASML’s customer order book for 2027 EUV systems, disclosed in the next quarterly call, will signal whether memory capacity expansion continues or plateaus. Finally, track TSMC’s Taiwan risk premium via options markets: any widening of implied volatility above current 28x forward earnings valuation suggests institutional investors are repricing geopolitical tail risk higher, creating tactical entry points for long-term holders willing to ride through near-term volatility.