AI semiconductors are still rising, so why is capital starting to abandon equipment stocks?

TL;DR

• A monthly semiconductor investor roundtable survey shows capital is favoring TXN, memory, and AMD, while being more cautious on equipment stocks and Intel.
• 70% of respondents believe TSMC's earnings impact the sector more than ASML's, with the focus on 2026 revenue growth and capital expenditures.
• Sentiment is stronger for TXN and memory, but uncertainties remain around equipment stock orders, HBM rumors, and Intel's foundry business.

A monthly roundtable survey aimed at semiconductor investors indicates that the AI semiconductor rally hasn't fizzled out, but capital preferences have clearly diverged. TSMC, Texas Instruments (TXN), memory stocks, and AMD are positioned more positively, while semiconductor equipment stocks and Intel face more skepticism.

The timing of this survey is sensitive. According to TSMC's official calendar, the company will hold its Q2 2026 earnings call on July 16. Texas Instruments announced its Q2 earnings call for July 22 at 3:30 PM ET. AMD's official calendar shows the "Advancing AI 2026" event scheduled for July 22-23, with the flagship global AI event livestream mentioned in its April announcement taking place on July 23.

Short-term capital doesn't just want to hear "AI demand is strong"; they need to see whether these companies can translate AI demand into tangible results like revenue growth, capital expenditure, gross margins, customers, and orders.

The most direct divergence in the survey lies between TSMC and ASML. 70% of respondents believe TSMC's earnings have a greater overall impact on the semiconductor sector, compared to 30% who chose ASML. This result suggests that buy-side investors are currently more concerned with how much AI demand translates into wafer foundry revenue and capital expenditure, rather than just looking at lithography machine order metrics.

TSMC vs. ASML Influence Poll: TSMC 70%, ASML 30%.

TSMC Becomes the First Stress Test for Semiconductors This Week

TSMC is placed ahead of ASML because it connects two key themes: AI revenue growth and expectations for equipment stock orders.

Buy-side expectations in the survey suggest TSMC might raise its 2026 sales growth guidance from the previous "over 30%" to "over 35%", with some respondents even betting on nearly 40% year-over-year growth. The five-year CAGR for AI sales might also be revised upward; the market had previously been discussing a range in the mid-to-high 50%.

These figures directly impact investors' assessment of the sustainability of AI semiconductor demand. If TSMC confirms higher growth, the market will be more inclined to believe that demand for AI servers, advanced processes, and advanced packaging is continuing. If the company merely maintains its previous stance, it could be seen as "not strong enough" in the short term.

More sensitive is the capital expenditure. TSMC previously set its 2026 capital budget at $52 billion to $56 billion. The market now wants to hear whether management will provide a clearer medium-term capex framework. However, this remains a buy-side hope, not a confirmed arrangement.

The pressure on equipment stocks also stems from this. Over the past two weeks, equipment stocks have pulled back, partly because investors worry that if TSMC doesn't signal strong enough medium-term capex, the order expectations previously priced into equipment stocks might need to be revised down.

ASML's problem isn't a lack of upside potential. After recent share price underperformance, valuation pressure has eased somewhat. However, the buy-side's bar in the survey is already high, with 2026 EUV lithography machine shipment expectations pushed to over 100 units. For ASML, the earnings press release itself might not be enough; the conference call and subsequent communications regarding orders, customers, and the 2026 cadence are more important.

TXN Bet On to Lead Analog Semiconductor Rally

In the analog semiconductor space, Texas Instruments is viewed as a clearer anchor for optimism.

The survey shows that 55% of respondents believe positive results from Texas Instruments would spur buying of other analog semiconductor stocks. 35% think the positive impact would be largely limited to Texas Instruments itself. Only 10% said they would sell regardless of the outcome.

Texas Instruments Earnings Spillover Expectations: 55% believe it will lift other analog stocks, 35% think it's mainly limited to TXN, and 10% lean towards selling.

The buy-side is betting not just on a slightly better single quarter's revenue, but on the potential for simultaneous improvement in analog semiconductor demand, pricing, and gross margins.

Market expectations in the survey indicate a consensus for TXN's Q3 sequential revenue growth of around 7%, higher than the typical seasonal rate of 5%. Some buy-side investors believe this figure could be revised up to 9% to 10%. For gross margins, the market consensus is around 60.25%, with Citi expecting 60.5%, and optimistic investors still waiting for upside surprises.

Three main factors support this judgment: the gradual impact of multiple price hikes flowing into financials, improved capacity utilization, and more favorable timing for 800-volt technology-related demand. For analog semiconductors, if revenue recovery is combined with gross margin improvement, the earnings leverage would be more significant than a simple increase in shipments.

The boundaries are also clear. Whether TXN's positive results spill over to the entire analog semiconductor sector depends on whether the demand improvement is broad enough, not just limited to the company's own pricing, capacity, or product mix enhancements. 35% of respondents still believe the positive impact might be mainly confined to Texas Instruments, indicating the analog sector hasn't received a unanimous bullish call.

Memory Buying More Concentrated, but HBM Rumors Remain a Disruptor

Memory is another area where optimism is concentrated.

The survey shows 65% of respondents chose to buy memory stocks, 30% are positive but not adding positions, and 5% believe the sector has peaked. This distribution indicates memory has become a relatively crowded but still favored direction within the semiconductor space.

Memory Investment Stance: 65% buy, 30% positive but not adding, 5% believe peaked.

Optimism stems from expectations that demand could continue well into the first half of 2027. Long-term agreements (LTAs) are also changing investors' views on memory companies. If customers lock in supply through LTAs, memory makers gain better visibility on demand, capital expenditure, and free cash flow, making shareholder returns easier to factor into valuations.

The survey also mentions the possibility of some memory companies buying back over 20% of their shares. This figure is significant for cyclical stocks because memory has historically been valued at a discount due to fears of a cyclical peak reversal. If cash flows become more stable and buybacks more definitive, the valuation logic may no longer be purely based on traditional cyclical stock metrics.

However, memory also has its controversies. Respondents slightly prefer NAND and DRAM, and are skeptical of rumors regarding HBM "de-specification." One view is that this could merely be a negotiation tactic between customers and suppliers, not necessarily representing genuine demand deterioration. Another risk is that if high-end HBM specifications or pricing fall short of expectations, the optimistic sentiment in memory could be shaken.

AMD Has an Easier Story for 2026, Intel Still Needs to Prove Its Foundry

AMD's AI event from July 22 to 23 is another focal point in the divergence of semiconductor capital.

The survey shows 50% of respondents expect the event outcome to be bullish and are preparing to take long positions. 40% believe the outcome will be positive but remain neutral. 10% are worried about disappointment and would sell.

The market hopes AMD will provide several types of information: an expansion of its total addressable market for CPUs and GPUs, progress with new customers, an increase in average selling prices (ASP), a rebound in its high-margin Xilinx business, and foundry support from TSMC for 2027. More directly, investors want confirmation that AMD is not just a secondary "AI alternative trade," but a company that can build a clearer revenue and profit narrative for 2026 and 2027.

This also explains the shift in sentiment towards Intel seen in the survey. Buy-side investors prefer AMD and have turned cautious on Intel. The reason is not that Intel has no chance, but that the stories the two companies can tell differ in difficulty: AMD's profitability model for 2026 is easier to construct, whereas for Intel's stock to rally significantly, the market needs higher confidence in its foundry success path.

Intel's problem remains execution. To gain customer trust in its foundry business, it needs to prove itself simultaneously in process technology, yield, delivery, and economics. As long as this path remains unclear, it's not surprising that capital continues to shift towards AMD.

The underlying theme of this semiconductor divergence is clear: AI demand remains strong, but capital is no longer indiscriminately buying all semiconductor assets. TSMC needs to prove growth and capex can still support the equipment chain. Texas Instruments needs to show price hikes and utilization can lift analog stocks. Memory needs to demonstrate that LTAs and HBM demand are not just short-term sentiment. AMD needs to translate its AI opportunity into customers, pricing, and a viable profitability model.

The most vulnerable areas in the short term remain those where expectations have been elevated. If TSMC fails to provide a sufficiently clear medium-term capex signal, equipment stocks could continue to face pressure. If HBM "de-specification" rumors are confirmed as more than just negotiation noise, memory optimism will cool. If Intel cannot increase market confidence in its foundry success, the trend of buy-side preference shifting towards AMD will persist.