Why Are Funds Starting to Abandon Equipment Stocks While AI Semiconductors Continue to Rise?

TL;DR
· A semiconductor investor roundtable survey shows that funds prefer TXN, memory, and AMD, while being more cautious about equipment stocks and Intel.
· 70% of respondents believe TSMC's performance has a greater impact on the sector than ASML, with a focus on revenue growth and capital expenditure in 2026.
· Optimism is stronger for TXN and memory, but there are uncertainties regarding equipment stock orders, HBM rumors, and Intel's foundry services.

A monthly roundtable survey targeting semiconductor investors indicates that the AI semiconductor market is still hot, but fund preferences have clearly shifted. TSMC, Texas Instruments (TXN), memory, and AMD are positioned more positively, while semiconductor equipment stocks and Intel face more skepticism.

The timing of this survey is sensitive. TSMC's official calendar shows that the company will hold its Q2 2026 earnings call on July 16. Texas Instruments announced it will hold its Q2 earnings conference call on July 22 at 3:30 PM Eastern Time. AMD's official calendar indicates that the Advancing AI 2026 event is scheduled for July 22 to 23, with a flagship global AI event live-streamed on July 23 as mentioned in an April announcement.

Short-term funds are not just looking for a statement of "strong AI demand," but rather whether several companies can translate AI demand into revenue growth, capital expenditure, gross margins, customers, and orders.

The most direct divergence in the survey is between TSMC and ASML. 70% of respondents believe TSMC's performance has a greater overall impact on the semiconductor sector, while only 30% chose ASML. This result shows that buyers are currently more concerned about how much AI demand will ultimately translate into foundry revenue and capital expenditure, rather than just looking at lithography machine order volumes.

TSMC vs ASML Influence Vote: 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 issues: AI revenue growth and expectations for equipment stock orders.

Buyers in the survey expect TSMC may raise its sales growth guidance for 2026 from previously over 30% to over 35%, with some respondents even betting on nearly 40% year-on-year growth. The five-year compound annual growth rate for AI sales may also be revised upwards, with previous market discussions in the mid to high 50% range.

These numbers will directly affect investors' judgments on 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 still ongoing. If the company merely maintains its existing guidance, it may be viewed as "not strong enough" in the short term.

Capital expenditure is even more sensitive. TSMC previously provided a capital budget of $52 billion to $56 billion for 2026. The market now wants to hear whether management will provide a clearer mid-term capital expenditure framework, but this remains a buyer's expectation and not a confirmed arrangement.

Pressure on equipment stocks also comes from here. Equipment stocks have seen a pullback over the past two weeks, partly due to investor concerns that if TSMC does not signal sufficiently strong mid-term capital expenditure, the previously implied order expectations for equipment stocks may need to be adjusted downward.

ASML's issue is not a lack of positive space. After underperforming recently, valuation pressure has eased. However, the threshold for buyers in the survey is already high, with expectations for EUV lithography machine shipments in 2026 pushed to over 100 units. For ASML, the earnings press release itself may not be enough; orders, customers, and the rhythm for 2026 in the conference call and subsequent communications are more important.

TXN is Bet to Drive Analog Semiconductors

In the analog semiconductor space, Texas Instruments is a clearer optimistic anchor.

The survey shows that 55% of respondents believe that if Texas Instruments reports positive results, it will drive buying in other analog semiconductor stocks. 35% believe the positive impact will mainly be limited to Texas Instruments itself. Only 10% indicated they would sell regardless of the results.

Texas Instruments Performance Spillover Expectations: 55% believe it will drive other analog stocks, 35% believe it is mainly limited to Texas Instruments, 10% lean towards selling.

Buyers are betting not just on a single quarter's revenue being slightly better, but on the simultaneous improvement of analog semiconductor demand, pricing, and gross margins.

Market expectations in the survey indicate that Texas Instruments' third-quarter sales quarter-on-quarter growth consensus is about 7%, higher than the normal seasonal 5%. Some buyers believe this figure could be revised up to 9% to 10%. In terms of gross margin, the market consensus is about 60.25%, with Citi expecting 60.5%, and optimistic investors are still waiting for upside potential.

The factors supporting this judgment mainly include three points: multiple rounds of price increases gradually entering financial statements, improved capacity utilization, and demand related to 800-volt technology entering a more favorable timing. For analog semiconductors, if revenue recovery is combined with gross margin improvement, the earnings elasticity will be more pronounced than a simple rebound in shipments.

The boundaries are also clear. Whether Texas Instruments' good results can spill over to the entire analog semiconductor sector depends on whether the demand improvement is broad enough, rather than just better pricing, capacity, or product structure for the company itself. Still, 35% of respondents believe the positive impact may mainly belong to Texas Instruments, and the analog sector has not gained a consistent bullish outlook.

Memory Buying is More Concentrated, but HBM Rumors Remain Disruptive

Memory is another direction where optimistic sentiment is concentrated.

The survey shows that 65% of respondents choose to buy into the memory sector, 30% are positive but not increasing positions, and 5% believe it has peaked. This distribution indicates that memory has become a relatively crowded but still favored direction within semiconductors.

Memory Investment Attitude: 65% Buy, 30% Positive but Not Increasing Positions, 5% Believe It Has Peaked.

Optimistic expectations stem from the possibility that demand may continue into the first half of 2027. Long-term agreements are also changing investors' views on memory companies. If customers lock in supply through long-term agreements, memory manufacturers will have greater visibility on demand, capital expenditure, and free cash flow, making it easier for shareholder returns to be factored into valuations.

The survey also mentioned that some memory companies might repurchase more than 20% of their shares. This figure is significant for cyclical stocks, as memory has often been discounted by the market based on the notion that "high points in the cycle will reverse." If cash flows are more stable and buybacks are clearer, the valuation logic may no longer be treated solely as traditional cyclical stocks.

However, there are also controversies surrounding memory. Respondents slightly prefer NAND and DRAM, expressing skepticism about HBM "de-specification" rumors. One view is that this may simply be a strategy in negotiations between customers and suppliers, not necessarily indicative of real demand deterioration. Another risk is that if high-end HBM specifications or pricing do not meet expectations, optimistic sentiment in memory could be impacted.

AMD More Likely to Tell the 2026 Story, Intel Still Needs to Prove Foundry

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

The survey shows that 50% of respondents expect the event results to be bullish and are prepared to trade long. 40% believe the results will be positive but neutral. 10% are worried about selling after disappointment.

The market hopes AMD will provide several types of information: the total addressable market for CPUs and GPUs is expanding, progress with new customers, average selling prices are increasing, Xilinx's high-margin business is rebounding, and TSMC's foundry support in 2027. To put it more directly, investors want to confirm that AMD is not just a secondary target in the "AI replacement trade," but can form clearer revenue and profit clues in 2026 and 2027.

This also explains the change in attitude towards Intel in the survey. Buyers prefer AMD and are becoming cautious about Intel. The reason is not that Intel has no opportunities at all, but that the difficulty of the stories the two companies can tell is different: AMD's 2026 profit model is easier to build, while for Intel's stock price to rise significantly, the market needs to have higher confidence in its foundry success path.

Intel's issues still lie in execution. To gain customer trust in its foundry business, it needs to prove itself in process, yield, delivery, and economics simultaneously. As long as this path is not clear enough, it is not surprising that funds continue to shift towards AMD.

The underlying tone of this round of semiconductor differentiation is clear: AI demand remains strong, but funds are no longer indiscriminately buying all semiconductor assets. TSMC needs to prove that growth and capital expenditure can still support the equipment chain, Texas Instruments needs to demonstrate that price increases and utilization can drive analog stocks, memory needs to prove that long-term agreements and HBM demand are not just short-term sentiment, and AMD needs to translate AI opportunities into customers, pricing, and profit models.

The areas most likely to encounter problems in the short term are still those where expectations have already been raised. If TSMC does not provide sufficiently clear mid-term capital expenditure signals, equipment stocks may continue to be under pressure. If HBM de-specification rumors are confirmed not to be mere negotiation noise, optimistic sentiment in memory will cool. If Intel cannot increase market confidence in its foundry success, the trend of buyers leaning towards AMD will continue.