After the latest tariff twists and chips export restrictions to China, initial earnings in the AI space were widely expected. They didn’t disappoint, with both Taiwan Semi and Siemens Energy releasing strong quarterly figures and either maintaining or exceeding full-year expectations.
Taiwan Semi, the leading maker of chips whose growth has been buoyed in recent quarters by massive demand for AI silicium, maintained its FY25 revenue growth target of mid-20% and long-term 53+% gross margin, while leaving unchanged its $38–42 billion capex guidance.
After 42% revenue growth in Q1 and a 39% growth guide for Q2 (5% above expectations), we believe management has been deliberately conservative with its FY guidance due to a highly uncertain environment but the current strength in Taiwan Semi business clearly sends positive signals about AI chips demand. Should the new export restrictions to China or tariffs have a lower-than-expected impact on end demand, earnings at Taiwan Semi and AI chips makers would be well on track to exceed expectations in our view.
Turning to the Powering AI theme, Siemens Energy pre-released its Q2 earnings with both orders (EUR14.4 billion) and 2025 EBITA guide coming 12% and 15% ahead of consensus, respectively.
The momentum in Gas turbines (generation equipment) is particularly impressive given that the H1 number (EUR13 billion) is already close to the EUR14 billion Gas revenues that consensus expects for the whole 2028. With the US administration seeking to launch or restart tens of power plants to address the AI power challenge and most other geographies having no choice but to also increase electricity production, Siemens Energy is in a very comfortable position to keep raising its revenue guidance in coming quarters, even assuming a significant tariff headwind.
Interestingly, we believe that Siemens Energy and peers also benefit from significant upside at the margin level. While Siemens Energy’s Q2 margin was already robust, notably in its Grid business, the current strong volume environment is coming with strong pricing power, suggesting that higher pricing and margins on current orders will only start impacting revenue and margins in 2026-27, offering earnings visibility over the next couple of years.
In conclusion, while we would expect most management teams to be cautious when announcing their quarterly or yearly guidance, business fundamentals remain highly supportive for AI names and derivative plays such as Powering AI companies with no major sign of slowdown despite a tricky macro environment. The 30% valuation derating in the last months already captures this risk in our view and opens the door to a major recovery when macro concerns ease.
