ASML and TSMC Signal Chip Expansion, but AI Returns Remain Unproven

ASML and Taiwan Semiconductor Manufacturing Co. (TSMC) are preparing for more chip production as equipment demand stays strong, but their latest outlooks do not establish whether AI applications will earn enough to justify the investment. ASML's third-quarter revenue reached a new high, rising about 25% from the previous quarter. Net income also increased, gross margin moved up to 57.5% from 54%, and sales of new lithography systems climbed to 113 from 86. The results show growth in both equipment sales and the profitability of the business, but they do not measure the returns that customers may get from AI-related capacity. ASML's installed-base management business also contributed to the quarter. It covers the company's equipment already operating at customer sites.

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