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Three companies just told the exact same story from three different seats. IBM fell by 25% saying its customers are diverting budgets to AI infrastructure mid-quarter. ASML raised forecast and committed to expanding capacity 30% because of what's flowing in. And overnight, TSMC, sitting directly between them in the supply chain, posted a record $40.2 billion quarter, beating estimates by nearly a billion. One company's outflow, another's order book, a third's record print. The whole AI budget migration showed up in the earnings season, in one week.
ASML, the Dutch company with a near-monopoly on the lithography machines that make advanced chips lifted its annual sales forecast above Wall Street estimates, citing AI demand directly. They announced plans to increase production capacity for chipmaking equipment by 30%. The market reacted the right way, ASML rose and dragged AMD and Intel up around 2% each soothing some of the chip supply chain bottleneck fears that have been floating around all month.
If you look at both the reports you can see both sides, IBM sitting on the legacy side of enterprise IT, says money is leaving its categories mid-quarter. ASML, sitting at the absolute source of AI compute supply, says demand is strong enough to justify expanding the an expensive manufacturing capacity by nearly a third. One company's outflow is literally the other's order book. IBM's claim of the direction of the budget migration got independently confirmed by the most reputed company in the entire chip supply chain.
Few things to note, ASML's forecast tells about the orders placed today, and those orders today are a dependent on hyperscaler capex plans that were set during peak AI enthusiasm. If Meta, Microsoft, or Amazon decide to reduce spending on 2027 capex those ASML orders can get delayed or cancelled, it's happened to ASML in past cycles and then a 30% capacity expansion would feel a lot painful. The whole chain, ASML to TSMC to Nvidia to the hyperscalers assume that end-market AI revenue eventually justifies the infrastructure spend and that question is still open.
Another interesting report came this morning. TSMC reported Q2 overnight, $40.2 billion in revenue, beating estimates by $900 million, EPS of $4.31 against a $3.83 estimate, net income up 77% year over year, and a 67.7% gross margin that came in above the top of their own estimate. They forecasted Q3 to $44.6-45.8 billion, another 12% sequential jump, and raised their full-year growth outlook to slightly above 40%. So in the same week, IBM says enterprise budgets are migrating to AI infrastructure, ASML commits to 30% more capacity, and the company in between them that is TSMC posts a record quarter.
The one nuance worth noting, TSMC's mature-node revenue (the older, non-AI chips) actually declined sequentially, so even inside the world's most important chipmaker, the AI end is carrying everything and the legacy end is shrinking, the exact same issue IBM described in its customer base.
So either this is the strongest coordinated demand signal in years or it's what a peaking of a cycle looks like. Also, which other legacy software and hardware names may be exposed because of this shift towards enterprise AI spending.