The Smart Investor·2026-01-27 23:30Capital Expenditure and Industry Impact - Taiwan Semiconductor Manufacturing Company (TSMC) announced a capital expenditure of US$52 billion to US$56 billion for 2026, representing an increase of 27% to 37% compared to 2025 [1] - This investment is beneficial for ASML Holding, the sole manufacturer of extreme ultraviolet (EUV) lithography machines essential for advanced chip production [3][4] - TSMC's expansion plans include building four new advanced packaging plants and starting mass production of its 2-nanometre process, which will require ASML's machines [4] ASML's Market Position - ASML reported net system bookings of €5.4 billion for Q3 2025, with €3.6 billion from EUV systems alone, indicating strong demand for its technology [3] - Despite expected revenue decline from China due to export restrictions, ASML's management is confident that total net revenue for 2026 will not fall below 2025 levels [5] Microsoft and Cloud Infrastructure - Microsoft reported a 40% growth in Azure and other cloud services revenue for Q1 FY 2026, driven by AI service demand [6] - The company serves 80,000 Azure AI customers, including 80% of the Fortune 500, and offers access to over 11,000 AI models [7] - Microsoft is investing up to US$15 billion in Anthropic, showcasing a strategy to diversify its AI model investments [8] Meta's Revenue Generation - Meta's AI-powered ad tools are generating a US$60 billion annual run-rate, with ad revenue from its Family of Apps surpassing US$50 billion, up 26% year-over-year [9][10] - CEO Mark Zuckerberg is optimistic about AI advancements and is investing accordingly, with a focus on monetizing new features like Reels and Business AI [11] Overall Industry Dynamics - TSMC's capital expenditure is a signal based on customer orders from hyperscalers building AI infrastructure, indicating strong demand from enterprises and consumers [12] - The success of the AI supply chain relies on the performance of ASML's bookings, Microsoft's cloud growth, and Meta's ad revenue [12]