Two semiconductor stocks have managed to thrive while most tech companies stumbled through 2026's market corrections: Taiwan Semiconductor Manufacturing (TSMC) and ASML Holding. TSMC, which manufactures chips for companies like Nvidia, Advanced Micro Devices (AMD), Apple, Amazon, and Broadcom, has climbed 25% year to date with analyst projections of another 20% upside. ASML, which makes the lithography machines that chip manufacturers use to design and produce semiconductors, has surged 31% this year with an expected 26% additional gain.

What Makes TSMC Unstoppable in the Chip Manufacturing Race?

TSMC's dominance stems from a unique business model that sets it apart from competitors. As a foundry, TSMC manufactures chips designed by other companies rather than competing with them directly. This neutral-partner approach has earned the company a commanding 70% market share in the foundry market, giving it unmatched economies of scale, technological expertise, and manufacturing efficiency.

The company's recent financial performance underscores investor confidence. In the first quarter, TSMC reported revenue growth of 35% year over year and 8% sequentially, while earnings surged 58% year over year and 13% from the previous quarter. Looking ahead, the company anticipates sequential revenue growth of 9% to 11% in the second quarter. These numbers explain why 98% of analysts covering the stock rate it as a buy, with a median price target of $456 per share.

TSMC's 151% gain over the past 12 months reflects more than just strong earnings; it reflects the company's critical role in powering artificial intelligence infrastructure. As AI demand continues to reshape the semiconductor industry, TSMC's manufacturing capacity has become increasingly valuable to the ecosystem of companies designing cutting-edge chips.

How Does ASML Control the Semiconductor Supply Chain?

While TSMC manufactures chips, ASML controls the machinery that makes chip manufacturing possible. The company produces lithography machines and technology used by semiconductor manufacturers to design and produce chips. This specialized niche gives ASML extraordinary influence over the entire industry; TSMC itself is one of ASML's largest customers.

ASML's first-quarter results demonstrate robust demand for its equipment. Revenue increased 13% year over year, and earnings rose 17%. The company also raised its revenue guidance for the current quarter to a range of approximately $42 billion to $46 billion USD, representing an annual revenue increase of 10% to 22%. This guidance boost reflects higher-than-anticipated demand from semiconductor manufacturers racing to expand capacity.

However, a recent development warrants attention. TSMC announced this week that it would delay purchasing ASML's next-generation lithography machines until 2029 to reduce costs, though it will continue using ASML's current equipment. Analysts have not yet adjusted their price targets in response to this news, making it a factor to monitor as it could impact ASML's future earnings growth.

Key Factors Driving Semiconductor Stock Resilience

• AI Infrastructure Demand: Record revenues for companies like TSMC are driven by surging demand for AI infrastructure, with capital expenditures exceeding $700 billion across the industry.
• Market Share Concentration: TSMC's 70% foundry market share and ASML's dominance in lithography equipment create structural advantages that insulate these companies from typical market volatility.
• Earnings Momentum: Both companies posted double-digit earnings growth in recent quarters, with TSMC's earnings surging 58% year over year and ASML's rising 17%, signaling sustained profitability.
• Analyst Consensus: 98% of analysts rate TSMC as a buy, while 82% of analysts covering ASML recommend the stock, reflecting broad institutional confidence.

How to Evaluate Semiconductor Stocks During Market Volatility

• Assess Market Position: Look for companies with dominant market share in their niche, such as TSMC's 70% foundry dominance or ASML's control of advanced lithography technology, which provide pricing power and resilience.
• Monitor Earnings Growth Rates: Compare year-over-year and sequential earnings growth to identify companies with accelerating profitability; TSMC's 58% year-over-year earnings surge and ASML's 17% growth signal strong underlying demand.
• Track Analyst Consensus: When 80% or more of analysts rate a stock as a buy, it often reflects institutional confidence in the company's competitive position and growth trajectory.
• Watch for Supply Chain Signals: Major customer decisions, like TSMC's delay of ASML equipment purchases, can signal shifts in capital spending plans and warrant closer scrutiny of future guidance.

The Philadelphia Semiconductor Index broke through the 10,000-point psychological level on April 23, marking its 17th consecutive day of gains, the longest winning streak in the index's history, with a cumulative rise of over 41% since February 28. This broader momentum reflects the entire semiconductor sector's strength, but TSMC and ASML have outpaced even this impressive rally.

Despite geopolitical risks and supply chain vulnerabilities, such as helium transport through the Strait of Hormuz, the semiconductor industry continues to attract capital and investor confidence. TSMC and ASML's ability to deliver strong earnings and guidance in this environment demonstrates the structural strength of companies positioned at the core of the AI infrastructure buildout. For investors seeking exposure to semiconductor growth without the volatility of smaller competitors, these two stocks represent rare examples of companies that have proven their resilience while maintaining significant upside potential.