The AI trade is still moving higher, but a tough round of validation is coming this week. Last week, all three major U.S. stock indexes closed higher. A rebound in technology stocks helped the market withstand upward pressure from oil prices and Treasury yields, while the Nasdaq Composite rose for a fourth consecutive week. As the new week began, S&P 500, Nasdaq 100, and Dow futures were broadly little changed, with investors clearly waiting for new catalysts. One of the most important sets of answers will soon come from the semiconductor supply chain.
ASML and TSMC will respectively report their third-quarter results on October 14 and October 15 local time. One controls the most critical lithography equipment for advanced processes, while the other directly handles demand for advanced processes from AI chip companies such as NVIDIA. The two earnings reports arriving in succession will amount to a joint upstream-and-downstream validation of global AI capital spending. ASML must answer how strong wafer fabs' appetite for expansion will be over the next two to three years; TSMC must answer whether current AI chip demand, profitability, and capital spending can remain at elevated levels. If both sides remain strong, the AI investment thesis will be further confirmed; if they diverge, supply-chain pricing could quickly split.

What numbers is the market really waiting for ahead of the earnings reports?
The importance is already clear. What now needs to be mapped out in advance is what the market has already priced in and which figures are most likely to break current expectations.
ASML: With expectations high, the harder question is how long growth can continue ASML will release its third-quarter earnings on October 14. After sharply raising its full-year outlook in July, the market's bar is already very high this time. The market currently broadly expects ASML's third-quarter revenue to be about €11.62 billion, up approximately 55% year over year and 25% quarter over quarter; gross margin of about 55.7%; and net profit of about €4.09 billion, up approximately 92% year over year. The company previously guided for third-quarter revenue of €11 billion to €12 billion and a gross margin of 55% to 57%. In other words, the market already expects the company to deliver a very strong report, so the real potential for an expectation gap lies in what comes next.
The first focus is whether full-year guidance will be raised again. ASML currently expects 2026 revenue of €43 billion to €45 billion and a gross margin of 54% to 56%. If fourth-quarter revenue is calculated based on the midpoint of €44 billion for full-year revenue and the current third-quarter market estimate, it would need to reach approximately €14.29 billion, slightly above the market's current expectation of about €14.05 billion. Whether management can maintain this growth pace will be the first test after the earnings report.
The second focus is new orders and EUV capacity. As AI chips continue shifting toward advanced processes, demand for EUV equipment is also increasing. New orders, EUV delivery capacity, and 2027 capacity plans will offer a more direct view of how aggressively wafer fabs worldwide intend to expand in the future.
The third focus is the more distant 2028.
Forward-looking data show clear disagreement in the market over ASML's growth momentum in 2028. Therefore, what could truly change the valuation in this earnings report is not just how much the company earns in the third quarter, but whether management can provide clearer long-term order visibility.
TSMC: Revenue has already been reported, making margins and capital spending the new focus One day later, TSMC will release its third-quarter earnings and hold its earnings call on October 15. TSMC previously guided for third-quarter revenue of $44.6 billion to $45.8 billion, with a midpoint of about $45.2 billion. On October 8, TSMC's latest revenue report showed that third-quarter revenue had already reached approximately $46.7 billion. Revenue has already exceeded the previous guidance, so the focus of the official earnings report has shifted to profitability and the next round of expansion.
First, can gross margin hold at elevated levels? As 2nm enters the early stage of mass production, the ramp-up of the new process will create some cost pressure. The market expects third-quarter gross margin to be around 67%. If TSMC can maintain this level during the expansion phase, it would mean that profitability remains strongly supported even as advanced processes grow rapidly.
Second, will capital spending continue to rise? In July, TSMC raised its 2026 capital spending forecast from $52 billion to $56 billion to $60 billion to $64 billion. Such massive investment is itself a bet on future AI demand. At this earnings call, whether 2027 capital spending will continue to expand will also directly affect the order expectations for equipment companies such as ASML.
Third, how steep a growth trajectory can AI demand maintain? TSMC has already raised its full-year revenue growth outlook in U.S. dollar terms. How management describes demand for AI accelerators, advanced processes, and advanced packaging this time will be an important signal for determining whether AI capital spending is still accelerating or gradually entering a stable phase.
Therefore, what is truly worth watching this week is not merely whether “the two companies beat expectations.” ASML must provide visibility into future equipment orders, while TSMC must validate current AI demand and the strength of the next round of expansion. If both sides remain strong, the AI capital spending thesis will be further confirmed; if they diverge, the market will need to reassess exactly which link in the supply chain is strong and which is not. #WCTCS9

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