One way to track the speed of the AI boom is by tracking the hardware supply chain. Nvidia is a prime example. As AI companies build out data centers, they’re snapping up billions of dollars in GPUs every month, turning Nvidia into the most valuable company on the planet. But Nvidia also has suppliers, and considering them can help you take a longer-term view of the market.
That’s why we’re looking at ASML, a Dutch photolithography company that’s become an important cornerstone of the semiconductor industry. ASML is the sole supplier of the EUV equipment needed to manufacture cutting-edge chips, making us a central supplier for the entire industry. If ASML is doing well, it’s because companies are expecting to sell a lot of semiconductors.
And the company is certainly doing very well, according to quarterly results released Wednesday morning.
Net sales were €32.7 billion, which is huge by any standards. However, the most important number for our purposes is “New Bookings,” which represents new orders that occurred during this quarter. These orders give an indication of how much capacity chipmakers think they will need based on anticipated orders for data center construction over the next few years.
By this metric, the AI infrastructure boom remains strong. Last quarter, ASML brought in new orders worth €13 billion. This is a new record for the company and more than double the orders from the previous quarter.
ASML CEO Christophe Fouquet revealed during the earnings call that additional demand is coming from AI.
“Over the past few months, many of our customers have shared significantly positive assessments of medium-term market conditions, primarily based on more solid expectations about the sustainability of AI-related demand,” Fouquet wrote. This means, in non-CEO English, that the customer expects the AI lab to actually need all the data centers it’s building and is putting money into it now to be able to supply the chips.
To be clear, there is no guarantee that none of this will happen. The future is not written! It could take years for all of these orders to be filled, and some customers may withdraw before the delivery deadline. The terrible Zitron prophecy may still come true and everything may fall apart.
But if you’re waiting for companies to roll back the expected trillions of dollars in infrastructure spending…you might be waiting a while.
