ASML, TSMC Earnings to Set Tone for Chip Sector Amid Accelerated AI Spending, B. Riley Says

Upcoming second-quarter earnings from ASML (ASML) and Taiwan Semiconductor Manufacturing Co. (TSM) are being framed as a crucial "tone-setting" event for the entire chip sector, according to analysts at B. Riley. The firm points to a massive surge in artificial intelligence infrastructure spending that it says has arrived approximately 12 months ahead of its prior forecasts.

AI Spending Surge Pulls Demand Forward

The core of B. Riley's analysis is an acceleration in capital expenditure by hyperscale cloud providers for AI infrastructure. The firm notes that guidance for calendar year 2026 has already jumped to a range of $695–$725 billion, a level it had not expected to see until 2027.

When combined with commitments from Oracle (ORCL) and other cloud players like CoreWeave and NBIS, B. Riley's total AI capex estimate for 2026 rises to approximately $880 billion. The firm projects this spending could cross $1.02 trillion in 2027, creating a significant demand tailwind for the semiconductor supply chain.

Implications for TSMC and Equipment Makers

This spending surge carries direct implications for TSMC's upcoming guidance. B. Riley suggests that if TSMC reclassifies CPUs into its high-performance computing (HPC) AI accelerator category, its 2026 sales growth forecast could be lifted by 500 basis points to +35% year-over-year. This view is supported by analysts at Citi, who also see a "higher likelihood" for TSMC to raise its long-term growth targets.

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The demand for AI is also driving growth in the server CPU market, which AMD (AMD) estimates will become a $120 billion total addressable market by 2030, per B. Riley.

On the capital equipment side, B. Riley believes 2026 wafer fab equipment (WFE) spending has moved "solidly above" the $140 billion-plus levels previously cited by firms like KLA Corp (KLAC) and Lam Research (LRCX). The firm sees a path for WFE spending to approach $170 billion-plus in 2027.

Market Backdrop

Analysts also see a longer-dated but significant tailwind from the memory market. Citing recent guidance from Micron (MU), B. Riley notes that much of 2026 memory capex is focused on facility construction, with spending on manufacturing tools not expected to accelerate meaningfully until 2027. This suggests a prolonged growth runway for equipment suppliers.

Despite a recent macro-driven sell-off in the sector, B. Riley stated that a "continued strong demand arc" should support earnings estimates for 2026 through 2028. The firm views the recent share price weakness as a potential entry point rather than a sign of a fundamental downturn.