Source: Wall Street See

The chip industry experienced a turbulent week, described as a week of 'two extremes,' starting with $ASML Holding (ASML.US)$ the performance disaster dragging down semiconductor stocks, followed by $Taiwan Semiconductor (TSM.US)$ shimmering financial reports, reigniting the market's optimistic sentiment about the unabated demand for AI.

Behind the contrast between hot and cold in the chip industry lies internal differentiation. Analysis suggests that apart from Taiwan Semiconductor, ASML's customers, Intel and Samsung, are facing their own challenges, while the demand from Taiwan Semiconductor's customers such as Nvidia remains strong, making Taiwan Semiconductor's performance a better indicator of AI demand.

In short, the AI-driven chip boom is far from over, but only the csi leading technology index can emerge as the ultimate winner.

ASML Crashed, Taiwan Semiconductor Exploded

The direct trigger for the turbulent stock prices was the performance of the two giants.

On Tuesday, the Dutch lithography giant ASML "carelessly" released its third-quarter report early. The data showed that the company's backlog orders fell significantly below expectations, returning to a low point in nearly three years, casting a cold spell on the market.

On that day, ASML plunged 17% on the US stock market, marking the largest single-day drop since 1998. This dragged down chip stocks collectively, causing a total market cap loss of over $420 billion for US-listed chip manufacturers and high market cap Asian chip stocks.

With the collapse of giants, the market is starting to question whether the demand for AI is still viable. Fortunately, Taiwan Semiconductor's financial report, announced just a day later, did not disappoint investors.

Taiwan Semiconductor's third-quarter report released on Thursday exceeded expectations across the board, with a 39.0% year-on-year revenue growth to a historical high, a 54% significant increase in net income year-on-year, and also achieving a historical high gross margin. Taiwan Semiconductor has also raised its performance guidance.

During the overnight regular trading hours in the US stock market, Taiwan Semiconductor's stock rose more than 12% at one point, surpassing a market cap of one trillion US dollars, with the closing increase narrowing to 9.79%.

Taiwan Semiconductor serves as a better indicator of the demand for AI.

Both ASML and Taiwan Semiconductor, giants in the upstream and downstream sectors of the semiconductor industry, have such different performances. It is necessary to delve into the customers behind ASML and Taiwan Semiconductor.

ASML sells large lithography machines to chip manufacturers including Taiwan Semiconductor, Samsung, and Intel. However, except for Taiwan Semiconductor, Intel and Samsung are both facing their respective challenges.

Once at the forefront of technology trends, Intel, due to strategic mistakes, has missed opportunities in emerging fields such as mobile internet and AI, and is being left behind by the times, having outsourced orders for processes below 3 nanometers to Taiwan Semiconductor.

Samsung Electronics also missed out on the AI boom, failing to seize opportunities in cutting-edge process chips, HBM, and other high-end storage chips. It significantly lags behind TSMC in foundry market share. This month, Samsung Electronics unusually issued an apology for operating profit falling below market expectations.

Only TSMC has been sprinting ahead in advanced technology processes. The latest financial report indicates that the revenue share of TSMC's advanced processes further increased, with the 3nm and 5nm processes contributing 52% of the third quarter revenue.

Looking at Taiwan Semiconductor's customers, including those who lead the AI chip trend $NVIDIA (NVDA.US)$ , as well as $Advanced Micro Devices (AMD.US)$And$Qualcomm (QCOM.US)$And the demand for these companies remains strong. Analysts believe that Taiwan Semiconductor is a better indicator of AI demand.

Morningstar stock analyst Javier Correonero told Business Insider: "From a technical perspective, $Intel (INTC.US)$ and Samsung lag behind Taiwan Semiconductor, this is only a specific customer issue, as Intel and Samsung cannot properly increase new nodes, but this is not related to demand."

During Thursday's conference call, TSMC CEO Wei Zhejia stated that the demand for AI is real and denied that artificial intelligence is in a bubble.

AvaTrade's Chief Market Analyst Kate Leaman said: "In the short to medium term, AI applications, data centers, and advanced chips will continue to drive strong demand... Therefore, while ASML may experience temporary slowdowns, companies like TSMC may continue to deliver strong performance in these high-growth areas."

As Qualcomm, Intel, and other chip companies announce their performance in the coming weeks, the market will present a clearer picture.

Editor / jayden