The semiconductor ETF (SMH) fell more than 4% this week, and TSMC reports earnings next week. If the results are good, will it rise again, or could it fall further?
2026-W41
Revenue is already out. The number the market will watch on 10-15 is a different one
TSMC's third-quarter revenue is already confirmed through monthly disclosures. It was about NT$1.49 trillion (about $46.7 billion), up 50% year over year, beating both the LSEG estimate of NT$1.46 trillion and the top end of company guidance of $45.8 billion (Gotrade, citing Focus Taiwan, 2026-10-08). There can be no revenue surprise in the 10-15 earnings release.
The previous quarter shows why. On July 16, TSMC posted record revenue of $40.2 billion and a gross margin of 67.7%, yet its shares fell about 4% on the day and 7.3% the next day along with an Asian chip selloff (declines differ by report). The causes were that the midpoint of third-quarter operating margin guidance was about 70bp below expectations, the company warned that second-half gross margin would be lower than the first half, and it raised its capex plan from $52-56 billion to $60-64 billion (Crypto Briefing, BingX, 2026-07).
So there are three numbers the market will watch this time.
- Fourth-quarter gross margin guidance. Third-quarter guidance was 65-67%, and some note that 2-nanometer process costs are weighing on margins (Zacks).
- The direction of 2027 capex. The cause of this week's AI selloff was OpenAI's revenue and Oracle's debt, that is, the profitability of AI investment. From that view, higher capex reads not as demand confidence but as a cost burden. That is how it was read in July.
- ASML's revenue guidance. ASML stopped disclosing quarterly orders from 2026, removing a leading indicator the market had long used. What remains is third-quarter revenue guidance of €11-12 billion and the annual revenue guidance of €43-45 billion raised in July (RTTNews, 2026-07). Whether these numbers hold is what needs confirming.
The SMH signal exit is a loss of speed, not a trend break
| Date | Close | MA10 | MA50 | MA150 | Entry condition | Trail buffer | From high |
|---|---|---|---|---|---|---|---|
| 10-05 | 633.90 | 611.42 | 571.30 | 537.08 | Met | 14.35% | -5.65% |
| 10-06 | 632.50 | 613.92 | 572.98 | 538.69 | Met | 14.15% | -5.85% |
| 10-07 | 625.03 | 616.28 | 574.89 | 540.19 | Met | 13.03% | -6.97% |
| 10-08 | 607.27 | 616.96 | 576.95 | 541.61 | Met | 10.39% | -9.61% |
| 10-09 | 603.33 | 616.64 | 578.24 | 543.09 | Not met | 9.80% | -10.20% |
The theme group judges its entry condition by a MACD crossover. The 10-09 exit was the result of MACD (13.26) falling below the signal line (13.29) by just 0.03. The close is still 4.3% above MA50, and the MA10 > MA50 > MA150 alignment remains. That means momentum has turned but the medium-term trend is alive. The trail stop is $537.46, 80% of the high of $671.83, almost the same place as MA150 ($543.09).
Paths for next week
CPI (10-14) comes a day before TSMC (10-15). CPI will first set the discount rate at which TSMC's guidance is valued.
| Path | Condition | SMH reference level | Signal meaning |
|---|---|---|---|
| Relief | CPI in line, TSMC margin guidance maintained | Recover MA10 at $616.64 (+2.2%) | MACD recross could meet the entry condition again |
| July replay | Good revenue outlook but lower margin or further capex increase | Break the weekly low of $600.32 and test MA50 at $578.24 (-4.2%) | Trend-test zone |
| Credit contagion | Hot CPI pushes the 10-year above 5.36% and Oracle credit worries spread | MA150 at $543.09, trail stop at $537.46 (-10.9%) | Trend damage, exit signal |
The lesson from July is that good earnings and a rising stock price are not the same thing. In a phase like this week, when the market weighs the cost of AI investment, a capex increase is more likely to weigh on the stock.
What investors should do
- If you hold SMH, trim part as the report's Trim call suggests, but do not rush to exit fully. The trend and the 9.80% trail buffer remain. Set the full-exit threshold at a close below MA50 at $578.
- Defer new buying until after both the 10-14 and 10-15 events. The entry signal is a close above MA10 at $617 with MACD crossing back above the signal line.
- At the TSMC release, check fourth-quarter margin guidance and the capex language first, not revenue. Do not chase early in the session on a strong-revenue headline.
You can see detailed charts and signals for other tickers on the /signals dashboard.