The $530 billion semiconductor industry is increasingly polarized between companies leveraging the artificial intelligence (AI) boom and those falling behind, a trend that seems set to intensify this earnings season. ASML Holding NV, a key chip production equipment manufacturer, recently cut its sales forecast for 2025 due to decreased demand outside of AI, highlighting concerns about the industry's overall health amid sluggish markets for personal computers and automobiles, coupled with geopolitical tensions impacting access to the Chinese market. While Taiwan Semiconductor Manufacturing Co. (TSMC) eased some industry fears by raising its 2024 revenue outlook, significantly driven by AI, other semiconductor equipment firms like ASML and Lam Research faced significant stock declines. Analysts anticipate this divergence will continue, with AI driving growth in certain sectors while traditional demand falters. The semiconductor sector serves as an economic gauge, as chips are integral to numerous products. However, companies providing chip manufacturing equipment, such as ASML, are signaling caution as they witness weakened demand in automotive and industrial segments.

Intel Corp. is making moves to cut costs and delay factory openings amid falling sales, while Samsung Electronics has faced its own setbacks. On the other hand, companies benefiting from large investments in AI by tech giants like Microsoft, Alphabet, and Amazon are poised for growth. AI semiconductor sales are projected to rise significantly, with Nvidia positioned as a market leader for AI accelerators; its shares have soared recently, nearly making it the world's most valuable company. Other beneficiaries of AI spending include TSMC, Broadcom, Arm Holdings, Micron, and AMD. While AI-related companies thrive, some of the winners are still vulnerable to weak demand in non-AI areas, as seen with Broadcom's disappointing results. The future may eventually see a resurgence in demand for non-AI chipmakers, but for now, AI remains the focal point for growth in the semiconductor industry.