Analysis of the Impact of TSMC's Optimistic Earnings Guidance on the Investment Value and Valuation of Semiconductor Equipment Suppliers

Based on collected data and market information, I now present a systematic and comprehensive analysis report for you.

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TSMC released its Q4 2025 financial report and 2026 earnings outlook in January 2026, which comprehensively exceeded market expectations, demonstrating the continued strong demand for AI chips and the company’s dominant position in the global wafer foundry industry.

Core Financial Metrics	Actual/Guidance	Market Expectations	Beat Margin
Q4 Revenue (USD)	$33.73 billion	$32.38 billion	+4.2%
Q4 Gross Margin	62.3%	60.4%	+1.9 pct
Q4 Net Profit (USD)	$16.3 billion	$14.58 billion	+11.8%
2026 Revenue Growth Guidance	+30% YoY	+25% YoY	+5 pct
2026 Q1 Revenue Guidance	$34.6-$35.8 billion	-	+36~40% YoY
2026 Gross Margin Guidance	63%-65%	-	Historical High
2026 Capital Expenditure	$52-$56 billion	$45.4 billion	+15~23%

• Raised CAGR for AI Revenue:
  TSMC raised the compound annual growth rate (CAGR) of its 2024-2029 AI revenue (GPU+ASIC+HBM controllers) from the previous “mid-40%” to “mid-to-high 50%”
• Continuous Increase in Advanced Process Share:
  7nm and below processes accounted for 77% of total wafer revenue in Q4, up from 69% in 2024
• Significant Gross Margin Improvement:
  Gross margin continued to exceed expectations due to improved capacity utilization, price hikes for N4/N3 and CoWoS advanced packaging, and a weaker New Taiwan Dollar [0][1][2]

TSMC announced its 2026 capital expenditure budget at

, which is 15%-23% higher than the market expectation of $45.4 billion, representing a 27%-37% year-over-year increase. This guidance has far-reaching industrial implications:

1. Dispelling Seasonal Concerns:
   The market had expected a slowdown in Q1 2026 due to seasonal factors in consumer electronics, but TSMC’s guidance shows revenue will remain flat or even grow quarter-over-quarter
2. Confirming the Sustainability of AI Demand:
   Management emphasized that “capital expenditure over the next three years will be significantly higher than the $101 billion invested over the past three years”, indicating strong confidence in long-term demand
3. Accelerated Expansion of Advanced Capacity:
   Mass production of 2nm process technology and expansion of CoWoS advanced packaging capacity require substantial equipment purchases [1][3]

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Following TSMC’s results release, the semiconductor equipment sector surged, fully reflecting its role as a “leading indicator” in the industry chain.

Ticker	Opening Price	Closing Price	Period Return	52-Week High Return
TSMC (TSM)	$286.92	$327.11	+14.01%	+17.2%
ASML	$1,056.03	$1,263.72	+19.67%	+25.1%
Applied Materials (AMAT)	$250.23	$301.89	+20.65%	+32.7%
Lam Research (LRCX)	$154.85	$208.79	+34.83%	+42.4%

• Equipment Stocks Outperform Foundry Stocks:
  ASML, AMAT, and LRCX all outperformed TSMC, with LRCX’s gain reaching 2.5 times that of TSMC
• Amplified Volatility:
  The daily volatility of equipment stocks (2.6%-3.4%) is significantly higher than that of TSMC (1.93%), reflecting a higher beta
• Price-Volume Surge:
  LRCX’s average daily trading volume reached 11.43 million shares, a significant increase from previous levels, indicating a marked rise in market participation [0]

From a technical analysis perspective, semiconductor equipment stocks exhibit typical strong performance characteristics:

Indicator	ASML	AMAT	LRCX	Interpretation
20-Day Moving Average	$1,139.74	$273.86	$186.73	Share prices are above the 20-day moving average, forming a bullish pattern
Price/20-Day Moving Average	+10.9%	+10.2%	+11.8%	Short-term overbought but with strong momentum
Volatility (Daily Standard Deviation)	2.81%	2.61%	3.37%	Volatility is at a stage high
Price Range	$276-$336	$247-$311	$154-$222	Broke through the upper edge of the previous consolidation range

• ASML: JP Morgan maintains an “Overweight” rating with a target price of $1,200; Bernstein upgrades to “Outperform” [4]
• AMAT: Susquehanna upgrades to “Positive”; B of A Securities maintains a “Buy” rating with a target price of $317.5 [5]
• Consensus Market View:
  Buy
  (Buy Rating)

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As the global leader in wafer foundry with a market share of approximately 59%, TSMC’s capital expenditure decisions serve as a “bellwether” for the semiconductor equipment industry. The transmission path is as follows:

Surge in AI/Data Center Demand
      ↓
Increase in TSMC Orders + Improved Capacity Utilization
      ↓
TSMC Raises 2026 Capital Expenditure to $52-$56 Billion (+27%~37% YoY)
      ↓
Upgraded Order Expectations for Equipment Suppliers + Enhanced Revenue Growth Certainty
      ↓
Upgraded Profit Forecasts + Valuation Multiple Expansion
      ↓
Share Price Increase (Gains typically lead to actual performance realization)

Semiconductor equipment investment has unique “bullwhip effect” characteristics:

1. Amplified Demand Signals:
   When AI chip demand is transmitted to TSMC, it is amplified into a larger-scale demand for equipment
2. Order Lag:
   Equipment typically takes 6-12 months from order placement to delivery, so share prices of equipment stocks often lead to actual revenue recognition
3. Capacity Rigidity and Technological Iteration:
   The current period is a critical juncture for the transition to GAA (Gate-All-Around) process (2nm) and HBM packaging technology upgrades, making equipment purchases a rigid requirement

• In the 2023-2024 semiconductor downcycle, equipment stocks bottomed out first
• When the AI wave started in 2024, equipment stocks outperformed chip design companies
• The “Phase 2 Bull Market” expectation in early 2026 is now being realized [3][6]

The increase in TSMC’s capital expenditure has varying degrees of positive impact on different equipment suppliers:

Equipment Type	Key Suppliers	Benefit Logic	Order Elasticity
Lithography Equipment	ASML	EUV lithography machines are essential for processes below 7nm, and 2nm capacity expansion requires more High-NA EUV	★★★★★
Etching Equipment	LRCX, AMAT	The number of etching steps in GAA process increases by more than 50%, and HBM TSV perforation requires precision etching	★★★★★
Film Deposition	AMAT, LRCX	Multi-layer metal gates and advanced packaging require more film deposition equipment	★★★★☆
Advanced Packaging	AMAT, KLAC	Capacity expansion for CoWoS, SoIC, and other advanced packaging technologies	★★★★☆
Inspection Equipment	KLAC	Increased process complexity raises inspection demand	★★★☆☆

Etching equipment benefits most directly from the transition to GAA process, and the company has high exposure to Chinese memory chip customers, benefiting from the recovery of the memory cycle [3][6].

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Ticker	Forward P/E	Historical Average P/E	Premium/Discount	P/B	EV/OCF
ASML	47.06x	~35x	+34%	23.45x	39.18x
AMAT	34.25x	~25x	+37%	11.74x	30.20x
LRCX	28.5x	~22x	+30%	~10x	~25x
Industry Average	~36x	~27x	+33%	~15x	~32x

1. Valuations Above Historical Averages:
   Equipment stocks are currently trading at a 30%-37% premium to their historical averages, reflecting the market’s pricing of the AI super cycle
2. ASML Enjoys the Highest Premium:
   Due to its global monopoly in EUV lithography machines (100% market share), ASML enjoys a “technology tax” valuation premium
3. ROE Supports High Valuations:
   ASML’s ROE reaches 52.15% and AMAT’s ROE reaches 36.12%, with high profitability providing support for high valuations [4][5]

The current valuation expansion of equipment stocks is mainly driven by the following factors:

Driver	Impact Level	Specific Performance
Upward Profit Revision Expectations	★★★★★	2026 profit forecasts raised by 15%-25%; Citigroup expects a “Phase 2 Bull Market”
Improved Order Visibility	★★★★★	TSMC’s raised capital expenditure guidance extends order visibility to 2027
Margin Expansion	★★★★☆	Increasing share of high-end equipment (EUV, advanced processes) is expected to drive gross margin to new highs
Mergers and Acquisitions Integration Expectations	★★★☆☆	Industry integration trends continue, strengthening leading players’ positions
Upgraded Long-Term Growth Assumptions	★★★★☆	AI chip demand will persist until 2030, with compound growth rates raised

Despite the optimistic outlook, the following risk factors deserve attention:

Risk Type	Specific Content	Potential Impact
Valuation Correction Risk	Current P/E ratios are at historical highs	Any underperformance may lead to a double whammy of earnings and valuation
Geopolitical Risk	China market revenue share (25% for AMAT, ~15% for ASML)	Export controls may be tightened
Fluctuations in AI Capital Expenditure	If tech giants cut AI investment	Equipment orders may be delayed
Overcapacity Concerns	If HBM/advanced packaging capacity expands too quickly	Order declines may occur after 2027
Technical Route Risk	Alternative lithography technologies (e.g., nanoimprint) may threaten ASML	Long-term valuation logic may be re-evaluated

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Based on DCF valuation and relative valuation methods, we assess the investment value of major equipment suppliers:

Ticker	Current Share Price	Consensus Target Price	Upside Potential	Investment Rating	Core Logic
ASML	$1,263.72	$1,200	-5.0%	Buy	Stable EUV monopoly position, high order visibility
AMAT	$301.89	$317.50	+5.2%	Buy	Full-line equipment supplier with the broadest benefits
LRCX	$208.79	$250	+19.7%	Overweight	Leading etching equipment player, benefiting from GAA process transition

1. ASML:
   As the world’s sole supplier of EUV lithography machines, ASML enjoys a “toll collection” advantage. The raised 2026 capital expenditure guidance directly translates to order growth, and while valuations are high, they are supported by fundamentals. It is recommended to accumulate on pullbacks. [4][6]

2. AMAT:
   With product lines covering the entire semiconductor manufacturing process (film deposition, etching, inspection, etc.), AMAT is a “one-stop” supplier. Its revenue from Taiwan accounts for 28%, directly benefiting from TSMC’s capacity expansion. Current valuations are moderate, and it is recommended to buy on dips. [5]

3. LRCX:
   The second-largest global supplier of etching equipment (after AMAT), LRCX benefits most directly from the GAA process transition. The capital expenditure recovery of memory chip customers (China, SK Hynix, etc.) brings additional incremental growth. Having seen significant short-term gains, it is recommended to wait for a pullback before entering. [3]

Scenario	WFE Expenditure Assumption	2026 Profit Growth Rate for Equipment Stocks	Valuation Expansion/Contraction	Recommendation
Optimistic Scenario	TSMC’s capital expenditure exceeds $60 billion	+25%~30%	P/E expands to 40-50x	Overweight
Base Scenario	$52-$56 billion guidance is fulfilled	+15%~20%	P/E remains at 35-40x	Hold
Pessimistic Scenario	AI capital expenditure slows down	+5%~10%	P/E contracts to 25-30x	Reduce

• The impact of TSMC’s results has been partially reflected in share prices
• Pay attention to the earnings guidance of ASML and AMAT in late January
• If results exceed expectations, equipment stocks are expected to rise by an additional 10%-15%

• Expectations for 2026 WFE expenditure will be further raised
• Mass production of advanced process capacity will drive accelerated equipment delivery
• Pay attention to potential changes in the new U.S. government’s semiconductor policies toward China

1. Set Stop-Loss Levels:
   It is recommended to set a stop-loss at 15%-20% below the purchase price
2. Dollar-Cost Averaging:
   Avoid heavy single-position bets; add positions on pullbacks
3. Monitor Option Market Volatility:
   Implied volatility is at a high level; consider selling options to enhance returns
4. Diversify Holdings:
   Avoid excessive concentration in a single stock

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TSMC’s release of optimistic earnings guidance has had a significant positive impact on the investment value and valuation of semiconductor equipment suppliers:

1. Greatly Improved Order Certainty:
   TSMC’s 2026 capital expenditure guidance of $52-$56 billion directly translates to order growth for equipment suppliers, extending order visibility to 2027

2. Upward Shift in Valuation Center:
   The market’s pricing of the AI chip super cycle has driven equipment stocks to trade at a 30%-37% premium to their historical average valuations, supported by profit growth and ROE improvement

3. Relative Advantages Emerge:
   In the semiconductor industry chain, equipment stocks have greater share price elasticity and investment certainty due to the “bullwhip effect”

4. Differentiated Pattern Continues:
   Etching equipment (LRCX) and lithography equipment (ASML) are more favored due to their technological barriers and rigid demand from process transitions

• 2026:
  The global semiconductor equipment market is expected to exceed $120 billion, with leading players such as TSMC, Samsung, and Micron continuing to increase capital expenditure
• 2027-2028:
  Sustained investment in AI infrastructure will support equipment demand, with advanced packaging and HBM capacity expansion becoming new growth drivers
• Long-Term:
  AI chip demand is expected to persist until 2030, and the semiconductor equipment industry will enter a new “super cycle”

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[0] Moomoo - “TSMC Just Told Wall Street: You’re Still Underestimating Artificial Intelligence” (https://www.moomoo.com/hans/community/feed/tsmc-just-told-wall-street-you-re-still-underestimating-ai-115898279329798)

[1] Tikr - “TSMC Profit Jumps 35% to a Fresh Record: Why the AI Chip Boom Is Far From Over” (https://www.tikr.com/zh/blog/tsmc-profit-jumps-35-to-a-fresh-record-why-the-ai-chip-boom-is-far-from-over?)

[2] Sina Finance - “25% Upside Potential! JPMorgan Turns Bullish on TSMC (TSM.US) Ahead of Earnings” (https://finance.sina.com.cn/stock/hkstock/ggscyd/2026-01-12/doc-inhfzukv4669757.shtml)

[3] Fomosoc Substack - “TSMC and Micron Rushing to Pay ‘Tolls’? Why Are Equipment Suppliers Lagging?” (https://fomosoc.substack.com/p/30asmllrcxamatklactel)

[4] Jinling API Company Profile Data - ASML Investment Analysis (2026-01-15)

[5] Jinling API Company Profile Data - AMAT Investment Analysis (2026-01-15)

[6] Zhitong Finance - “AI Computing and Storage Demand Surges: Chip Capacity Expansion Begins! Semiconductor Equipment Enters a New Bull Market” (https://9fzt.com/common/7b8156d846001fac6474ab05ee1f63db.html)

[7] Jinling API Market Data - Price Trends of Semiconductor Equipment Stocks (2025-12-01 to 2026-01-15)

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January 15, 2026
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This report is for reference only and does not constitute investment advice. Investors should make investment decisions based on their own risk tolerance.