Wafer-Fab Equipment & Lithography

Onto Innovation has emerged as a key beneficiary of the AI semiconductor investment cycle, with its stock jumping 125.6% in a year, roughly matching the Zacks Nanotechnology industry's 125.7% gain and outpacing the Zacks Computer and Technology sector and the S&P 500 composite, which rose 26% and 15.5%, respectively. The company reported record second-quarter revenue of $343.1 million, up 35.3% year over year and nearly 18% sequentially, with non-GAAP earnings per share of $1.93 versus $1.25 a year earlier, while backlog exceeded $1 billion for the first time. Management raised its second-half 2026 revenue, margin and EPS outlook, guiding third-quarter revenue of $380 to $400 million and expecting gross margin to expand by another 50 basis points in each of the third and fourth quarters, with operating margin improving 200 basis points to 31.5-32.5% in the third quarter and exceeding 33% by year-end. The company also raised its 2026 advanced-packaging growth outlook to at least 80% from more than 50% previously and now expects advanced-nodes revenue to grow more than 35% in 2026, up from about 25%, helped by its Dragonfly G5 platform and more than $200 million in Dragonfly orders from a single OSAT, mostly for 2027 delivery. In April 2026, Onto Innovation agreed to acquire a 27% stake in Rigaku Holdings for about $710 million, and it ended the second quarter with $1.88 billion in cash and short-term investments, though risks include customer concentration, with four customers accounting for 57.3% of first-half 2026 revenue, and a forward price/earnings multiple of 30.23X versus the industry's 5.83X.

SUSS MicroTec SE has entered the wafer-level cleaning market with the launch of its new GreenTec Solutions product line and its first system, the GT200. The company said the wafer-cleaning market it is targeting represents an addressable market of approximately EUR 5.4 billion, driven by advanced packaging, heterogeneous integration and rising semiconductor demand from AI and high-performance computing. The GT200 is designed for research and development, process qualification and production in 200 mm manufacturing environments for MEMS, RF, Power Device and CMOS applications, and combines the company's TurbulenStrip and CrustBuster process technologies in a single platform. SUSS said the GT200 is the first member of a scalable GreenTec platform and that it will expand toward high-volume manufacturing with a dedicated 300 mm HVM platform in 2027, pulled in from its original schedule due to strong customer interest, followed by a 200 mm HVM platform in 2028. Chief Executive Officer Burkhardt Frick called the launch an important milestone in the execution of the company's Ambition 2030 strategy, while Senior Vice President Photomask Solutions Yuta Nagai said the product line represents its vision for a next generation of semiconductor manufacturing where sustainability and process excellence go hand in hand.

ACM Research Shanghai released a voluntary announcement on the evening of September 30, stating that as of September 29, 2026, the company's total orders in hand amounted to 17.073 billion yuan, an increase of 88.20 percent compared with the orders in hand voluntarily disclosed in the same period last year. The company said that since 2026, the semiconductor equipment manufacturing industry has continued its rapid growth trend, and the company's revenue has maintained sustained growth. The previously released half-year report showed that operating revenue in the first half of the year reached 3.718 billion yuan, up 13.87 percent year on year, while net profit attributable to the parent company was 989 million yuan, up 42.14 percent year on year. The company has already disclosed its full-year 2026 earnings forecast, expecting annual operating revenue to be between 8.2 billion and 8.8 billion yuan.

China's chipmaking equipment industry is growing rapidly as wafer fabs across the country turn to buying 100% domestically produced machinery after supply chain restrictions imposed by Western nations. Data from Google Trends for August to September 2026 shows surging keywords including China Semiconductor Tooling Localization and Domestic Wafer Fab Equipment, while retail investors continue searching for ASML China Export Restrictions. One clear beneficiary is NAURA Technology Group, or 002371.SZ, whose product lines cover etching equipment, thin-film deposition, and wafer cleaning tools, placing it close to Applied Materials and allowing Chinese fabs to procure nearly an entire equipment suite in a single package, with its order backlog overflowing under the National Semiconductor Self-Reliance policy. Another is Advanced Micro-Fabrication Equipment, or AMEC, or 688012.SS, a specialist in plasma etching whose CCP and ICP etchers can compete with Lam Research and which has repeatedly won patent cases against major multinational giants, allowing it to rapidly expand its share of the Chinese market from the tens of percent range to a market-leading position.

Applied Materials has entered a major R&D partnership with KIOXIA focused on next generation memory for AI workloads, based at Applied Materials' new US$5b EPIC Center. The collaboration targets memory cell structures, multi chip stacking and advanced packaging, with both companies working to improve manufacturability and density of future memory technologies tailored for AI focused chip architectures. The EPIC Center alliance with KIOXIA is only one piece of what is changing around Applied Materials' AI memory ambitions. Applied Materials builds the tools, software, and services that chipmakers use to manufacture semiconductors at scale, and the KIOXIA partnership plugs directly into its role supplying core production gear for memory and AI focused devices across the US, Asia, and Europe. A key data point to monitor is how quickly EPIC Center projects with KIOXIA convert into production tools and service contracts once the facility becomes operational this year.

UBS analyst Francois-Xavier Bouvignies maintained a constructive outlook on European semiconductor stocks heading into third-quarter 2026 earnings, naming ASML Holding NV, ASM International NV and STMicroelectronics NV as his top three picks in a September 29 research note. The investment bank raised its wafer-fab equipment forecast for 2026 through 2028, projecting total WFE reaching approximately $225 billion in 2027, up 43% year-over-year, with potential to climb toward $275 billion to $300 billion by 2028, and it keeps 2027-2028 earnings estimates more than 10% above consensus across the sector. ASML remains the top pick with a Buy rating and a €2,350 price target, and UBS expects the company to guide fiscal 2027 revenue growth above 30% year-over-year when it reports third-quarter results on October 14, with its third-quarter revenue estimate of €12.1 billion sitting 3% above consensus. ASM International is second, with UBS forecasting 36% revenue growth in fiscal 2027 versus consensus at 29% and 33% growth in 2028 versus consensus at 19%, translating to EPS estimates 10% above consensus in 2027 and 20% above in 2028 ahead of results due October 27. STMicroelectronics completes the top three with a Buy rating and €80 price target, as UBS sees 2027 EPS roughly 20% above consensus, silicon photonics revenues reaching about $2.0 billion in 2027 and $2.5 billion in 2028, and total datacenter revenues of approximately $2.5 billion, or about 14% of group sales, in 2027 rising to roughly $3.8 billion, or 19% of group sales, by 2028, with fourth-quarter revenue guidance expected up approximately 10% quarter-over-quarter when it reports on October 29.

Wells Fargo says semiconductor capital-equipment companies could be the biggest near-term beneficiaries of a potential TSMC expansion of 2-nanometer production. Analyst Joe Quatrochi wrote that reports of the possible capacity increase should be viewed as a potentially incremental positive opportunity for semi cap companies, though timing, size and node details are still unconfirmed. Building additional 2nm capacity would require significant spending on lithography, deposition, etching and inspection equipment, adding a layer of demand for suppliers supporting TSMC's fabs. Quatrochi pointed to the so-called Silicon Prairie as a logical location for a potential second U.S. campus, citing existing semiconductor operations in Texas from Texas Instruments, Samsung, Coherent and Terafab, plus TSMC's design service center in Austin. TSMC's major 2nm customers include Apple, Nvidia, AMD and Qualcomm, with Google, Broadcom, Marvell, Amazon and OpenAI also expected to use the advanced process.

KLA Corporation's backlog climbed to $12.57 billion at the end of fiscal 2026 from $7.86 billion a year earlier, driven primarily by demand tied to the AI infrastructure buildout. In the fourth quarter of fiscal 2026, the company raised its calendar 2026 wafer fabrication equipment market expectation, including advanced packaging, to the low-$150-billion range, up from its earlier view of more than $140 billion and compared with roughly $120 billion in calendar 2025. KLA expects second-half calendar 2026 revenues to increase roughly 20% from the first half as additional supply becomes available, and it forecasts advanced-packaging process-control systems revenues of approximately $1.1 billion in calendar 2026, up more than 70% year over year. Rivals are expanding too: Applied Materials expects its process diagnostics and control business to grow more than 50% in 2026, while ASML Holding expects full-year 2026 advanced foundry and logic revenues to rise about 25%, memory revenues to increase 75% and EUV revenues to grow roughly 45%. KLA shares have risen 55.7% year to date, and the Zacks Consensus Estimate for its earnings stands at $1.18 per share, unchanged over the past 30 days and implying 34.09% year-over-year growth.

JPMorgan analysts said on the 28th that the recent correction in global AI-related trading has improved investors' positioning and made valuations more attractive, which could encourage investors to re-enter the market, particularly in semiconductor stocks. In a report, they noted that tech may not return to past peak levels, but the underlying scenario remains positive and there are many investment opportunities within the AI-related sector. They said investor positioning in the AI space has been cleaned up and valuations have fallen sharply across most areas, while capital expenditure is likely to remain solid despite recent slowdown concerns. On semiconductor stocks, they maintained a bullish outlook citing strong fundamentals, price increases through 2027, and supply-demand tightness expected to persist until 2028, while keeping a cautious stance on software stocks, assessing that AI growth continues to leave the sector's long-term outlook uncertain.

The Singapore Economic Development Board (EDB) said on September 28 that Singapore's manufacturing output in August surged 15.4% year on year, driven by broad-based growth across most industry clusters. On a seasonally adjusted basis, manufacturing output in August fell 0.5% month on month. The report said output rose year on year in nearly every sector except chemicals. The precision engineering cluster soared 33.9%, led mainly by the production of semiconductor machinery and equipment. The electronics cluster rose 28.5% on the strength of server and related products, semiconductors, and data storage equipment, amid strong demand related to artificial intelligence. The transport engineering cluster expanded 9.5%, led by land vehicles and aircraft. The general manufacturing industries cluster grew 1.5%, and biomedical manufacturing edged up 0.4%. Chemicals was the only cluster to decline, with output falling 12.7%, weighed down by the petroleum and petrochemical segments.

Taiwan Semiconductor Manufacturing Co is accelerating its 2-nanometre capacity expansion, with monthly output projected to reach about 120,000 wafers by the end of 2026, ahead of earlier expectations of 90,000 to 100,000 wafers, according to Taiwanese publication EDN. Customers including Apple, Nvidia, AMD, Qualcomm and MediaTek have recently raised orders for TSMC's 2nm family capacity by 10% to 20%, the report said, citing industry sources. TSMC is bringing five 2nm fabs online this year, two in Hsinchu and three in Kaohsiung, according to senior vice president Hou Yung-ching. Hou said first-year 2nm wafer output would be 45% higher than the first-year output of 3nm in 2023, while 2nm capacity is expected to grow at a compound annual rate of 70% from 2026 to 2028.

Micron Technology plans a historic US$100b semiconductor manufacturing complex in the Syracuse, New York area. The planned complex is expected to create about 9,000 Micron jobs and roughly 40,000 additional roles across suppliers and services, and local officials describe the project as a potential anchor for reindustrialization in a region often labeled part of the former Rust Belt. The Syracuse buildout extends Micron's role as a large scale supplier of DRAM and storage into a US anchored manufacturing base targeting AI, cloud and automotive memory demand, alongside its existing US and Japan projects. The clearest signal on whether the bet is working will be how Micron phases Syracuse spending and output into its existing long term customer agreements, especially the 16 supply contracts backed by about US$22b of deposits and commitments. Progress updates on construction timing, tool installs and committed AI memory volumes over the next few years will show whether the complex is filling or chasing demand.

Taiwan Semiconductor Manufacturing is establishing an advanced-packaging testing and training hub in Kaohsiung that will let suppliers test equipment and materials alongside the chipmaker before those technologies reach production. Two buildings are expected to open in late 2029, and TSMC has said the setup could make validation 25% to 50% more efficient. The company's U.S. shares rose about 0.4% to $453.02 around 10:28 a.m. ET Friday, based on Thursday's $451.15 close. The article notes that faster testing is not the same as more chips ready to sell, and that the shares sit 24.45% above GuruFocus's $364.01 GF Value estimate.

Anthropic has signed a computing deal worth at least $11.6 billion with Akamai, sending shares of European companies tied to the artificial intelligence buildout higher on Friday. Under the agreement, Akamai will provide Anthropic with access to central processing units, while Anthropic will receive a warrant to buy Series B shares at $111.33 each, convertible into 7.7 million common shares. The contract is Akamai's largest ever and marks an acceleration of its push beyond its core content delivery and cybersecurity businesses; the company expects to spend about $5.5 billion on capital expenditures tied to the agreement, more than six times its total 2025 capital spending. The deal follows a $1.8 billion computing agreement between the two companies earlier this year, as Anthropic expands capacity for its Claude AI software and strikes deals with providers including Alphabet's Google and Elon Musk's SpaceX. In European trading, ASML Holding rose 2.3%, BE Semiconductor Industries gained 1.6%, ASM International added 1.03%, Infineon Technologies climbed 1.2% and STMicroelectronics advanced 2.01%, while data-center-linked Siemens Energy and Prysmian each rose 2%.

Onto Innovation has raised its full-year 2026 advanced packaging growth outlook to at least 80% from more than 50% previously, citing strong demand for its Dragonfly G5 inspection platform. The company generated $343.1 million of quarterly revenue, up 35.3% year over year, while its inspection business, dominated by Dragonfly systems, grew approximately 30% sequentially on demand from 2.5D logic and HBM applications. Onto launched Dragonfly G5 in March 2026 and disclosed in April that the platform had been qualified for 2.5D AI packaging applications, with demand strongest among HBM manufacturers and AI-focused OSATs, including more than $200 million in Dragonfly orders from a single OSAT, most slated for 2027. Management said demand for the Dragonfly platform is expected to grow more than 50% in 2026 from 2025 and expects further growth in 2027 with no signs of customer overcapacity. Competitors are also benefiting from the same AI-driven spending: KLA now expects 2026 wafer fabrication equipment spending in the low-$150 billion range, up from $135-$140 billion, and Applied Materials expects advanced packaging revenue to grow more than 70% in 2026, up from its prior outlook of more than 50%.

Forecasts from 12 private think tanks and other institutions for the Bank of Japan's September National Short-Term Economic Survey of Enterprises, or Tankan, to be released on the 1st of next month, were all in by the 25th. The average forecast for the business conditions diffusion index, which gauges corporate sentiment, stands at plus 26 for large manufacturers, a 4-point improvement from the previous June survey. The dominant view is that demand related to artificial intelligence and semiconductors will lift sentiment, and this would mark the sixth consecutive quarter of improvement for manufacturers. While industries producing equipment and materials related to semiconductor manufacturing, such as electrical machinery and production machinery, are analyzed as performing well, it has been pointed out that automobiles may act as a drag due to sluggish growth in export volumes. The average forecast for large non-manufacturers is 36, down 1 point from the June survey, with many companies expecting flat or slightly worse conditions due to weak inbound demand and rising costs such as fuel and labor expenses. Based on this Tankan, the Bank of Japan plans to analyze risks such as higher crude oil prices and AI-driven upward pressure on prices, and to look for the timing of an additional interest rate hike.

Applied Materials has committed US$5b to India over the next decade, anchored by a 140 acre semiconductor research park. The announcement comes as the company's share price has climbed 76.39% year to date, with a 1 year total shareholder return of 138.91%, though the 90 day share price return is down 24.34%. Applied Materials closed at $474.25, while the most followed narrative framework places fair value at $627.66, implying the stock is 24% undervalued, and a separate discounted cash flow model estimates future cash flow value at $277.49. The company's broad portfolio and investments in local manufacturing infrastructure, including new Arizona and EPIC centers, position it to capture a greater share of global wafer fab buildouts, with over 100 new fabs or expansions tracked this year. Risks include reliance on China and a concentrated group of large chipmakers, where export restrictions or delayed fab projects could undermine the upbeat narrative.

Lam Research drew fresh attention after management lifted its 2026 wafer fab equipment outlook to the low US$150b range while also flagging a sharp expected rise in advanced packaging revenue. The stock has risen 14.1% over the past week but is down about 19% across the last three months, even as its year-to-date share price return sits near 66% and its 1 year total shareholder return is about 141%. The current share price of $307.16 sits well below a narrative fair value of $423.85, a gap that hinges on how the AI driven memory cycle plays out. On earnings multiples the picture is tougher, with the stock trading on a 52.9x P/E, above both the peer average of 46.9x and a fair ratio of 44.6x. The narrative could break if memory makers pull back capex faster than expected or if China restrictions tighten and compress wafer fab demand.

Takeshi Yamagiwa, chair of the Liberal Democratic Party's parliamentary league on semiconductor strategy, said in an interview with Reuters that Rapidus, the government-backed company aiming for mass production of advanced semiconductors, is "miraculously on schedule at this stage," and that if mass production is achieved, customers will be secured and "financing and an initial public offering will both go smoothly." He added that in the future, a U.S. listing and local production in the demand-heavy American market are "a possibility." Government research and development outsourcing funds for Rapidus have so far reached about 2.4 trillion yen, and last July the company confirmed the operation of a prototype 2-nanometer-class chip at its base in Chitose, Hokkaido, and is moving ahead with preparations for mass production. Yamagiwa said, "It is important to have a mass production system in place by around this time next year and to show the world chips being mass produced." He noted that, reflecting on the "defeat" Japan suffered after holding the top share in the 1980s and then being forced into decline as trade restrictions under the Japan-U.S. semiconductor agreement tightened, the country this time is working with American companies from the outset and aiming for a "win-win relationship," and that a stance of "not half-heartedly withdrawing public support, with the government committed to the very end," is a major difference from the semiconductor strategy of decades ago. Regarding reports that South Korea's SK Hynix is considering building a memory chip plant in Japan, he said, "If there is a manufacturing base in Japan, the supply chain will be stronger. Basically, it should be welcomed," while adding that Japan-South Korea cooperation must be weighed against the risk of technology and talent outflow, and that "we must look strictly at how far we can work together."

Taiwan Semiconductor Manufacturing Company and ASML Holding announced a collaborative industry initiative on September 8 to transition the semiconductor sector to a 12-inch Extreme Ultraviolet photomask format, replacing the 6-inch masks chipmakers currently use for High NA EUV systems. The shift aims to boost scanner productivity, eliminate stitching constraints on ultra-large chips, and lower long-term advanced node manufacturing costs, with the initiative targeting a pilot line by 2031 and 12-inch High-NA production by 2033. TSMC plans to adopt High-NA EUV starting in 2030, with the 12-inch masks providing a multi-year roadmap for scaling complex AI architectures. For ASML, establishing a 12-inch standard locks in the long-term economic case for its High-NA scanner line, supporting its 15% revenue expansion outlook, while for TSMC the larger format helps defend its leading-edge and AI/HPC manufacturing dominance. The decade-long roadmap carries execution risk, as the entire global supply chain, from mask blanks and inspection equipment to automated handling, must retool from scratch, and TSMC faces near-term gross margin dilution from its N2 ramp and overseas fab expansions while ASML contends with gross margin pressure in late 2025 and geopolitical growth uncertainties through 2026.

ASML Holding won broader customer commitments for its roughly $400 million High-NA EUV machines, even as its U.S. shares fell about 1.8% to $1,713.41 in Thursday morning trading. Intel is already using High-NA in volume production on selected chip layers, Samsung plans to bring the technology into DRAM production in 2028, and TSMC targets advanced chip production from 2030. ASML says its EXE:5200B can print features 1.7 times smaller than its current NXE systems in a single exposure, potentially sparing customers costly manufacturing steps. The catch is price: chipmakers need enough output and yield gains to earn back the cost of each machine, and ASML needs those gains to turn early commitments into lasting demand. At $1,713.41, the shares sit 35.5% above the roughly $1,260 GF Value estimate, a premium that puts pressure on High-NA to deliver on the factory floor.

Teradyne reported Q2 revenues of $1.33 billion, up 104% year on year, exceeding analysts' expectations by 9.3% and posting the biggest analyst estimate beat and highest guidance raise among the 14 semiconductor manufacturing stocks tracked. The company, a US-based supplier of automated test equipment for semiconductors, also beat analysts' EPS and operating income estimates, and its stock is up 20.8% since reporting, trading at $387.50. Across the group, revenues beat consensus estimates by 3.5% while next quarter's revenue guidance came in 6.5% above expectations, and share prices are up 7.2% on average since the latest earnings results. Kulicke and Soffa reported revenues of $330.4 million, up 123% year on year and 5.7% above expectations, the fastest revenue growth of the group, though its stock is down 3.2% since reporting at $90.86. KLA Corporation reported revenues of $3.66 billion, up 15.2% year on year and 1.3% above expectations, with its stock down 1.5% at $188.03, while Entegris reported revenues of $883.2 million, up 11.5% and 5.5% above expectations, with its stock up 19.8% at $149.97, and Amtech reported revenues of $22.38 million, up 14.5% and 4.1% above expectations, with its stock down 5.2% at $15.19.

Japanese stocks look set to catch up with a global AI-led rally when trading resumes Thursday, with Nikkei 225 futures in Osaka trading about 1.4% above Friday's settlement of the underlying gauge after the Silver Week holiday. Chip-equipment makers Tokyo Electron and Advantest are expected to be among the biggest winners, according to Hu You, a senior research analyst at iFast Financial in Singapore, who also flagged chip package substrate maker Ibiden and memory maker Kioxia Holdings. The yen traded around 157.28 per dollar in Tokyo after a four-day losing streak, its longest since late August, keeping traders alert to intervention risk following the Bank of Japan's Friday rate hike and its signal that further tightening remains possible. The BOJ move, which disappointed yen traders for its lack of clearer guidance, also leaves bond traders facing a volatile reopen, with iFast's Hu You saying the hike sets a higher floor for short-term rates and is fundamentally negative for front-end JGB prices. The global AI trade has gathered steam on early signs of success for Meta Platforms' new AI agent and Alibaba Group Holding's unveiling of what it calls China's most powerful AI chip, though overnight weakness in US equities and rising oil prices may temper the optimism.

Citi analyst Atif Malik raised his price target on Micron Technology to $1,300 from $1,150 while keeping a buy rating, citing better than expected DRAM pricing and continued supply tightness heading into fiscal Q4. Malik also lifted his August and November quarter estimates and said he expects the stock to rally into SEMICON West as equipment makers highlight DRAM shortages. On Micron's fiscal Q3 call, CEO Sanjay Mehrotra said DRAM and NAND industry demand continues to significantly exceed industry supply and that tight conditions should persist beyond calendar 2027, with fiscal Q3 DRAM prices up in the low 60s percentage range and NAND prices up in the mid-80s percentage range. Micron has signed 16 Strategic Customer Agreements, typically five-year take-or-pay deals running through calendar 2030, and for 14 of the 16 the cumulative minimum-price revenue is approximately $100 billion, backed by $22 billion in cash deposits and letters of credit. The stock trades around $1,075.72, up 277.14% year to date, at a forward PE of 7, while consensus fiscal 2027 EPS has climbed to $156.53 from $117.86 ninety days ago, leaving Citi's $1,300 target below the Street average of $1,515.

Renishaw reported record full-year results for the year to June, with revenue up 14% to £815.8 million and adjusted pretax profit rising 32% to a record £168 million, sending its shares up around 3%. Adjusted operating profit climbed 36% to £152.9 million, lifting the margin to 18.7% from 15.7%, while adjusted earnings per share increased 30% to 179.5p and statutory pretax profit rose 27% to £150 million despite £18 million of redundancy and other one-off costs. Fourth-quarter revenue reached a record £244.2 million, up 28% year on year, and the order book continued to grow. Position Measurement was the standout division, with revenue jumping 26% to £260.9 million and adjusted operating profit up 53% to £71.5 million as its margin expanded to 27.4% from 22.5% on demand for optical encoders used in semiconductor manufacturing equipment, while Specialised Technologies grew revenue 43% to £107.5 million and swung from a £9.9 million adjusted operating loss to a £4.7 million profit. Industrial Metrology, still the largest part of the group, grew 4% as weakness in some traditional industrial markets offset demand for newer metrology systems and software. Renishaw increased its regular dividend by 5% to 82p per share and added a special 70p interim dividend, with cash and deposits rising to £291 million.

Yuanta Securities views Lam Research Corporation, or DR LRCX19, as one of the beneficiaries of rising demand for NAND flash memory, especially as AI usage expands from model training toward broader real-world deployment. Lam Research derives a relatively large share of revenue from equipment used to produce NAND, while revenue from equipment for DRAM memory chips is also supported by growing demand for advanced chips, namely the stacking of DRAM into HBM, a technology in which Lam Research already has expertise. In the short term, improving US-China relations could also be a supporting factor for the company, since it generates a high proportion of revenue from China and had previously been restricted from selling certain types of equipment to Chinese customers. The meeting between Trump and Xi Jinping could fuel short-term speculative interest. For the earnings outlook for fiscal year 2027, which ends in June 2027, the Bloomberg Consensus expects normalized profit to still grow strongly at 62% year on year, while the current price trades at a PER of 32 times for FY2027. It gives a target price of 4.80 baht per DR, implying 24% upside.

TSMC spent $15.59 billion on capital expenditure in its June 2026 quarter, its largest quarterly outlay in the past eight quarters and about 42% above the $10.98 billion spent in the prior quarter, as the company raised its 2026 capital budget for a third time this year, from $52 billion to $56 billion in January, to the high end of that range in April, and to $60 billion to $64 billion in July. On the Q2 2026 earnings call, CFO Wendell Huang guided third quarter gross margin down 170 basis points to 66%, citing 3 to 4 percentage points of dilution from the steep ramp of TSMC's 2 nanometer process, even as the June 2026 quarter's gross margin reached 67.72%, its highest in two years and consistent with the 67.7% figure cited by CEO C.C. Wei. Huang said TSMC generated about $24.5 billion in operating cash flow that quarter, enough to cover the $15.59 billion in CapEx and roughly $4.9 billion in dividends without new borrowing. TSMC is trading at 22.46 times forward normalized earnings, close to its 22.41 times two year average and well below the 29.65 times high in that range, after a mid September selloff tied to AI safety warnings from Anthropic's Dario Amodei and OpenAI's Sam Altman rather than anything specific to TSMC. Institutional 13F filings dated June 30, 2026 show a split Street, with Coatue raising its TSMC stake 7.6% to 9.3 million ADRs and Situational Awareness lifting its position to 2.6 million shares, while Lone Pine cut its stake 92.7%, SoftBank cut 71.5%, and Viking Global cut 29%.

Asset Plus Fund Management assesses that the rally in technology stocks and the massive investment in AI infrastructure still show no clear sign of entering bubble territory. Kamolyot Sukhumsuwan, Chief Investment Officer, said such concerns are reasonable given the rapid rise in share prices and the accelerating investment by hyperscalers in data centers, semiconductors, and artificial intelligence infrastructure, pushing capital expenditure budgets to record highs. However, any assessment should look at demand across the entire supply chain rather than share prices or the size of CapEx alone. Upstream, ASML reported sales of 9.3 billion euros, beating market expectations, and raised its full-year revenue target, with nearly all of its order book already secured for 2027. TSMC, meanwhile, posted revenue of 40.2 billion US dollars, up 33% from a year earlier, with its High Performance Computing business accounting for 66% of total revenue, and raised its 2026 capital expenditure budget to 60 to 64 billion US dollars. In memory, Micron said its HBM production capacity for 2026 is fully booked under long-term contracts, while SK Hynix has begun mass shipments of HBM4 and has long-term agreements with several customers. On the conversion of orders into revenue, NVIDIA reported revenue of 96.2 billion US dollars in its latest quarter, up 106% from a year earlier, with Data Center revenue at 89.0 billion US dollars, while Broadcom posted revenue of 29.6 billion US dollars, up 86%, with AI chip revenue up 221% to 16.7 billion US dollars. The key issue to watch next is how well this enormous wave of investment will generate adequate returns, since CapEx is starting to pressure cash flow and financing costs remain high. AI Infrastructure and AI Labs, which rely heavily on external funding, carry more risk than hyperscalers with strong financial positions. Asset Plus Fund Management still sees AI as a key long-term investment trend, but investors should focus on the quality of growth and choose companies that can sustainably turn AI opportunities into earnings.