ASML and TSMC report earnings this week. Why are people saying the fate of semiconductor ETFs hinges on them? What could happen to my chip stocks depending on the results?
2026-10-12
Revenue is already out; the market is looking at next quarter
TSMC's third-quarter revenue is effectively public. September revenue was NT$511.86 billion, up 54.6% year over year, and the third-quarter total of about NT$1.49 trillion ($46.71 billion) exceeded the top of the company's $44.6-45.8 billion guidance (KSL citing Reuters, 2026-10). So revenue is not the focus of the October 15 results.
- Fourth-quarter guidance and next year's capex: After the report of OpenAI's revenue being revised lower, the market is asking "will AI customers keep increasing orders next year?"
- Margins: Third-quarter gross margin guidance is 65-67%. Some point out that early 2nm costs could weigh on margins (Zacks, 2026-10)
ASML (October 14) is a more direct leading indicator. EUV machines cost about $300 million each with lead times of 8-12 months, so orders coming in now preview next year's chip capex.
- Third-quarter revenue guidance is 11-12 billion euros, and annual guidance is 43-45 billion euros (Investing.com, 2026-07)
- Visible Alpha's consensus for third-quarter new orders is 5.36 billion euros, below the first-half total of 9.48 billion euros (GuruFocus, 2026-10)
- The problem is that expectations are already high. ASML shares have risen 32% since September 2, more than double the Philadelphia Semiconductor Index's 15% gain (GuruFocus, 2026-10)
"The key is how quickly customers can ramp production amid long equipment lead times." — Javier Correonero, Morningstar (2026-10)
Three paths depending on the results
| Scenario | Conditions | SMH Reaction | Korean Chips |
|---|---|---|---|
| AI demand reaffirmed | ASML orders beat consensus; TSMC raises Q4 guidance and signals higher capex next year | Recovers 10-day average and rebounds. But ASML has already risen sharply, so upside may be limited | Materials, parts and equipment react first; large-cap memory needs foreign selling to stop |
| Good numbers, cautious tone | Results beat but with language such as "customers adjusting next year's orders" | Short-term decline. With expectations high, a "good but sold" reaction | Large-cap range extends |
| AI doubts confirmed | Orders miss consensus or capex outlook for next year is cautious | The report's 5-10% SMH correction scenario materializes | Risk of KOSPI breaking 6,562 support |
The second path is the most likely. With TSMC revenue already above guidance and ASML shares up more than twice as much as the chip index, good numbers will struggle to push prices higher. The real variable for chips this week is less the numbers than the words management uses about customer orders for next year.
Where SMH stands on the signals
In the signal history, SMH's entry condition (entry_ok) turned off on October 9. The last five sessions look like this.
| Date | Close | 10-Day MA | 50-Day MA | 150-Day MA | entry_ok | From High | Room to Stop |
|---|---|---|---|---|---|---|---|
| 10/5 | 633.90 | 611.42 | 571.30 | 537.08 | Yes | -5.65% | 14.35% |
| 10/6 | 632.50 | 613.92 | 572.98 | 538.69 | Yes | -5.85% | 14.15% |
| 10/7 | 625.03 | 616.28 | 574.89 | 540.19 | Yes | -6.97% | 13.03% |
| 10/8 | 607.27 | 616.96 | 576.95 | 541.61 | Yes | -9.61% | 10.39% |
| 10/9 | 603.33 | 616.64 | 578.24 | 543.09 | No | -10.20% | 9.80% |
The close slipped below the 10-day average, turning off the new-entry signal, but it remains above the 50-day and 150-day averages, so the medium-term trend is intact. With 9.8% left before the trailing stop, holders are not yet in exit territory.
What should investors do?
- Holders: There is no reason to rush to sell before earnings. There is about 10% of room before the stop, and the 50-day average (578.24) is the first support. Trim if the 50-day breaks
- Those waiting to enter: Avoid buying ahead of earnings. It is not too late to enter after the October 15 TSMC conference call if SMH closes back above its 10-day average (about 617)
- Korean chip holders: TSMC's results will pass through the U.S. session that night and hit the KOSPI on the 16th. Under scenario 1, materials, parts and equipment will react before large-cap memory
Detailed charts and signals for other stocks are available on the /signals dashboard.