For the market's biggest concerns of "tariffs and AI," these two financial reports are crucial, and now half of the answers have been revealed

Against the backdrop of ongoing tariff disputes, the chip industry is also facing a severe test, with investors increasingly worried about whether demand for AI chips can continue to grow.

The earnings reports of the two giants, ASML and Taiwan Semiconductor, this week are crucial for the market's main concerns regarding "tariffs and AI," with the focus on their performance guidance and orders.

Now half of the answer is out, ASML's new orders in Q1 plummeted by 45%, far below expectations, while maintaining its full-year sales guidance. Taiwan Semiconductor will announce its earnings report on Thursday, and analysts expect it to lower its performance guidance.

Regarding tariff risks, MorningStar analyst Phelix Lee believes:

The final industry tariffs will make investing in U.S. data centers riskier and may trigger a comprehensive slowdown in new data center construction, further increasing the profit risks for Taiwan Semiconductor and its supply chain.

Affected by the dual impact of tariff threats and future AI demand concerns, Taiwan Semiconductor and ASML are at the forefront, suffering from a significant market downturn. ASML's stock price once fell to its lowest level since the outbreak of the COVID-19 pandemic, while Taiwan Semiconductor's stock price has dropped over 20% this year. After today's earnings report, ASML's U.S. stock fell by 5% in after-hours trading.

Quilter Cheviot technology analyst Ben Barringer stated:

Both ASML and Taiwan Semiconductor's stock prices are significantly discounted, and many risks have clearly been priced in. However, due to the uncertainty surrounding semiconductor tariffs, it is difficult to see them being revalued without more specific news.

ASML Emphasizes Tariffs Add "Demand Uncertainty"

On April 16, ASML's latest earnings report confirmed market concerns. According to Wall Street News, ASML's new order amount for Q1 of fiscal year 2025 was only €3.94 billion, far below the market expectation of €4.82 billion, and a significant decline of 44.5% from the previous quarter's €7.088 billion, with EUV equipment orders accounting for €1.2 billion. In terms of performance guidance, ASML maintained its sales guidance for 2025, expecting second-quarter sales to be between €7.2 billion and €7.7 billion.

ASML CEO Christophe Fouquet clearly stated in a statement that recent tariff policies have increased uncertainty in the macro environment, which will affect the company's prospects for 2025 and 2026.

On Monday, Trump announced the exemption of reciprocal tariffs on smartphones and other electronic devices, leading to some signs of easing in global semiconductor stocks, but analysts believe this relief may not last long, as the exemption is only temporary.

According to Xinhua News Agency, the U.S. government's relevant online platform quietly released information last Friday night, exempting so-called "reciprocal tariffs" on electronic products such as smartphones, laptops, and chips. Trump suggested on Monday that he is considering the possibility of exempting tariffs on imported cars and parts, but also hinted at imposing new tariffs on chips and pharmaceuticals In addition to direct tariffs, what is concerning is that a comprehensive increase in tariffs will suppress economic growth, which is undoubtedly a bad omen for an industry that is highly sensitive to economic cycles. For chips used in AI, although demand remains strong, the question is how long this demand can be sustained.

TSMC's performance is also not optimistic, will it lower future guidance?

TSMC's performance seems to be less than optimistic, with more and more analysts predicting weak performance and subsequently lowering their price targets.

Previously, TSMC expected a revenue growth rate of around 20% in 2025, but now JP Morgan anticipates that the company may slightly lower this growth target to as low as the mid-20% range. Deutsche Bank stated that as clients adapt to tariff changes, TSMC may also lower its performance guidance.

Nori Chiou, Investment Director at White Oak Capital Partners, stated,

The upcoming performance report from chip manufacturers is "unlikely to be too bad," as demand for artificial intelligence remains strong. However, uncertainty regarding AI demand is rising for next year, and policy fluctuations may affect the formulation of the next round of long-term planning, which is worth close attention."

In addition to the headwinds from tariffs, both TSMC and ASML are facing issues, with reports of potential collaboration with Intel casting a shadow over TSMC's prospects, as analysts question the rationale behind this strategic move. Furthermore, TSMC's commitment to invest $100 billion in the U.S. may weigh on the company's future profit margins.

For ASML, its main customer Intel's spending plans are still changing, while another major customer, Samsung Electronics, is facing challenges in ramping up advanced chip production