Taiwan Semiconductor Manufacturing Co. (TSMC) and ASML both reported strong first-quarter earnings this week, driven by surging demand for artificial intelligence chips. TSMC posted a 58% increase in first-quarter profits, marking its fourth consecutive quarter of record profits, with 61% of its revenue coming from the high-performance computing segment, up from 55% the previous quarter. Gross margins rose to 66%, and advanced chips (7nm and below) accounted for about 74% of revenue. Despite these robust results, TSMC shares fell about 2% on Thursday, as investors had sky-high expectations. Smartphone revenue was a weak spot, falling 11% quarter-over-quarter, and TSMC executives stated they do not expect near-term impacts from the Iran war, citing safety inventories of specialty gases [1].
ASML, the Dutch maker of chip manufacturing equipment, also posted strong first-quarter results and raised its forward guidance. However, its shares dropped as much as 6.5% on Wednesday before closing 2.5% lower, and fell another 3% on Thursday. The market reaction was attributed to concerns over shrinking sales to China and investor expectations that were only met, not exceeded. Analysts were unimpressed by the number of extreme ultraviolet lithography (EUV) machines ASML is producing for customers like TSMC. CEO Christophe Fouquet stated the company could deliver 80 low numerical aperture EUV machines in 2027, depending on customer demand [1].
In contrast, quantum computing stocks experienced a significant rally this week, fueled by Nvidia’s unveiling of Ising, a new family of open-source AI models designed to accelerate quantum computing adoption. Since the start of the week, IonQ and D-Wave Quantum shares have surged 50%, while Quantum Computing and Rigetti Computing rose more than 20% each. Nvidia CEO Jensen Huang emphasized that AI is essential for making quantum computing practical, positioning Ising as a control plane for quantum machines. Nvidia’s announcement coincided with "World Quantum Day" on April 14th. Nvidia shares themselves marked their longest winning streak since 2023, up 18% over ten days [2].
Despite the rally, the quantum sector remains small and volatile, with a combined market value of about $31 billion before Thursday’s open. Many quantum stocks have slumped year to date, with D-Wave and Rigetti down 20% and 15%, respectively. IonQ also announced it had linked two remote quantum computers and secured a contract with the Defense Advanced Research Projects Agency [2].
CONCLUSION
Strong earnings from TSMC and ASML failed to lift their shares, highlighting the pressure of high investor expectations in the chip sector. Meanwhile, Nvidia’s AI-driven quantum computing initiative sparked a sharp rally in quantum stocks, underscoring the market’s enthusiasm for transformative technologies. The contrasting reactions illustrate both the volatility and the high stakes in advanced computing markets.