Q2 Earnings Expectations and the EU Quantum Push
This article outlays what to watch out for in the upcoming earnings season along with diving into Europe's quantum computing push.
It’s nearly that time again. Earnings season is around the corner, and I’m looking forward to seeing what comes from it. First quarter earnings were very impressive, but it was too soon to see what impact the tariffs had. Although I don’t expect massive impacts on tech in Q2 either, I do expect to see sales from Asia to fall even further. Stocks are back at all-time highs and everything looks good again. Right? I don’t want to sound dramatic, but how the tech companies do will dictate where the major stock indices, especially the Nas100 and S&P500, end up at the end of the summer. So if we get a string of poor results, then there may be an oversized reaction with a massive selloff. Although I don’t see a high probability of this happening, I would very much like to put more cash to work at a discount in the wonderful world of tech. Today, I’ll be covering what to expect and look out for this upcoming earnings season. But before that, I want to touch on something else.
European Quantum Act
When it comes to tech, Europe is miles behind in almost every aspect. The AI industry is significantly behind the US and China, mainly due to the lack of funding and heavy regulations. Venture capital doesn’t exist in Europe in the same way that it does in the US. But it seems that Quantum Computing is one area where they don’t want to be left behind. Earlier this week, the EU revealed the European Quantum Act, a proposal to invest €4.4bn into quantum computing between 2025 and 2027. The aim is to create a pan-European “quantum ecosystem” that links research centres, standardises hardware, and helps Europe stay relevant on the global stage. The main areas of focus will be:
Research and Innovation: Coordinating public and private research through a new Quantum Europe Research and Innovation Initiative.
Quantum Infrastructures: Expanding access to shared computing, communication, and sensing facilities under public control.
Industrial Ecosystem Support: Funding startups, building pilot production lines, and encouraging more private capital flow into the space.
Space and Security Integration: Embedding quantum into EU space, defence, and intelligence programs such as Eagle-1.
Skills Development: Launching a pan-European training pipeline to build the next generation of quantum engineers and technicians.
One of the biggest issues the EU is trying to address is the gap between research and real-world adoption. Over €11bn has already been spent on quantum R&D over the past five years, which has produced solid scientific progress, but very little commercial output, although this is a common theme across the world. Currently, Europe is home to about a third of the world’s quantum companies and supplies nearly half the global hardware, yet national fragmentation and weak industrial demand have held it back. To change that, the EU plans to launch six quantum pilot lines focused on prototyping, process development, and scaling production. The idea is to move away from bespoke, lab-built setups toward more standardised, manufacturable systems. A Quantum Chips Industrialisation Roadmap is expected in 2026, along with a standards roadmap to improve interoperability across the continent.
If you look at the image below, you’ll see Europe isn’t actually that far behind when it comes to quantum machines. In fact, the EU has a decent number of systems spread across different platforms. The US still leads in total machines, especially in superconducting, but Europe stands out for its diversity. No one knows which approach will win in the long run, so having exposure to multiple architectures could play in Europe’s favour if one of them breaks through. Within the area, Finland and Germany are clearly leading on superconducting, while France is doing a lot of work on cold atoms. I won’t dive into these methods as it’s beyond the scope of the article, but if you’d like to learn more about Ion traps, check out my IonQ article.
This is all great, but how does one make money from this? At this stage, it’s difficult as many of the quantum firms in Europe are private. The two public names with the most exposure to quantum computing are Thales, a French aerospace and defence firm, and Airbus, the multinational aerospace group. Thales has exposure to quantum communication and sensing through its work with European defence and satellite programs, whereas Airbus is involved in quantum simulation and materials optimisation, particularly for aviation and logistics use cases. Both are the biggest public names with ties to quantum, but their exposure isn’t yet significant enough to move the needle in their share prices.
Q2 Earnings Season: Key Things to Watch
ASML
On the topic of Europe, one of the biggest and most important companies in tech comes out of Europe. ASML. I’m sure most of you already know what ASML does, but for those who don’t, ASML is the only company in the world that makes extreme ultraviolet (EUV) lithography machines, which are essential for producing cutting-edge chips at the smallest nodes. They supply critical equipment to the likes of TSMC, Intel, and Samsung, and without their machines, high-end chips simply don’t get made.
Wall Street currently has estimates set at $5.80 for EPS and $8.72bn in revenue for ASML’s Q2 2025 results. Of course, I remain optimistic as always, but I think for ASML to get back to a high-growth phase, it will take the better part of a year. Some of their largest customers, Intel and Samsung, have both been struggling. Intel has delayed fab timelines and continues to lose market share to TSMC, while Samsung’s latest earnings report was poor, with operating profit down 56% YoY to ₩4.6 trillion, driven by weak memory demand, delays in HBM supply, and pressure from US export restrictions to China. So in short, if ASML’s customers are struggling, they will pull back on spending and this will hurt ASML’s sales.
What I’ll be keeping an eye on this quarter is whether bookings recover meaningfully from last quarter’s miss, and if the product mix skews more heavily toward EUV, which would help support margins. I’ll also be watching for any updated commentary on China and export controls, which continue to weigh on sentiment. Most importantly, I’ll be listening closely to management’s tone around the second half of the year, as they’ve previously said growth would be H2-weighted. If they stick to that view, it could be enough to stabilise expectations, even if Q2 itself is relatively muted.
TSMC
TSMC is still the most important company in semis and their results always give a good read on where demand is heading. For Q2, they guided revenue between $28.4bn and $29.2bn with gross margins in the 57 to 59% range, but the latest sales figures came in slightly short. June revenue was NT$207.9bn, bringing total Q2 sales to NT$673.5bn or around $20.7bn, below the low end of guidance. I’ll be watching closely to see what they say about the 3nm and 2nm ramps, how advanced packaging capacity is holding up, and whether overseas fabs are starting to weigh on margins. They’ve raised full-year CapEx to between $38bn and $42bn, so if they’re sticking to that, it shows they’re still confident in AI demand scaling into 2026. But if they dial that back, or flag digestion issues, it could be a sign that the front-loaded part of the cycle is starting to fade. To expand further, what I mean is that we’ve already seen a massive wave of AI-related orders over the past 12 months and that demand has been driving everything from packaging capacity to node transitions. If TSMC starts hinting that customers are pausing to absorb what they've already ordered, or that CapEx is being deferred into 2026, it could mean we’re moving into a slower, more normalised phase of the cycle. Not a collapse, just a shift from hyper-growth to digestion and that has implications across the entire AI supply chain. But I personally don’t think we’re there yet, especially with 2nm chips coming into the picture.
Hyperscalers
Spending from the hyperscalers, meaning Amazon, Microsoft, Google and Meta, has been the backbone of the AI infrastructure buildout. Last quarter, CapEx was massive across the board, particularly from Google and Meta, with both guiding for elevated spend through the rest of the year. The big question now is whether that spend is starting to convert into real revenue. Google Cloud growth slowed slightly last quarter, so I’ll be watching closely to see if that trend reverses. Microsoft has been consistent, but Azure growth has not really broken out despite the Copilot rollout. Amazon is more vertically integrated than the others, building their own chips and full-stack solutions, so their Q2 results will be important for gauging actual usage and demand across enterprise. Meta is spending aggressively too and while their AI strategy is still hard to pin down commercially, engagement and ad revenue growth have been strong. Heading into this quarter, I’ll mainly be watching CapEx trends, cloud growth and any shift in tone on AI monetisation.
Chip Designers
For Nvidia, the focus is on how quickly Blackwell is ramping and whether margins start to recover after last quarter’s hit from inventory charges tied to US export restrictions. Those restrictions along with the Blackwell ramp, caused a temporary dip in gross margin, but underlying demand stayed strong. Nvidia is also preparing to release a chip specifically for China. While it won’t be best-in-class, I still expect it to be highly sought after given how embedded Nvidia is across most AI workflows. The cost of switching ecosystems is high, and that alone should protect demand. I still think Nvidia will continue growing at a very high rate, and unlike the last time it was on a tear, it’s not trading at a particularly stretched valuation relative to its peers.
For AMD, all eyes are on MI300. They’ve been gaining some ground in the data centre, and management has been vocal about AI revenue ramping through the rest of the year. The main thing I’ll be watching is whether that growth is broad-based or still concentrated in just a few hyperscaler wins. AMD doesn’t have the same ecosystem lock-in as Nvidia, so adoption needs to be driven by price-to-performance and availability. If they can show momentum beyond just headline wins, that would be a strong signal. I’ll also be keeping an eye on margins, as ramping a new product line usually comes with some short-term pressure. If they’re able to defend profitability while scaling MI300, it strengthens the case that they’re a credible number two in the space.
Summary
With stocks trading near/at all-time highs, I think the risk-reward is skewed. Bad news is likely to hit harder than good news helps. At these levels, it doesn’t take much for people to panic sell or lock in profits; a revenue miss, weak guidance, or anything slightly off can trigger a sharp move lower. On the flip side, even a solid beat might not be enough to drive much upside unless the outlook is exceptional. But not all names are at all-time highs, so for me, my interest lies in where I can still add new names into the portfolio, and AMD is certainly looking interesting. Of course, comparing any stock to its April lows can make the current price look expensive, but investing isn’t about catching bottoms. It’s about identifying companies with strong fundamentals, clear catalysts and long runways for growth.
This quarter will also be interesting as tariff impacts should, in theory, begin to show in the numbers. While a lot of the noise has been around tech and AI, I think consumer cyclical and industrials are more exposed in the near term. These sectors rely heavily on global supply chains and are more sensitive to raw material costs, shipping disruptions and retaliatory tariffs. Companies in these spaces often operate on tighter margins, so any additional friction or input cost can feed through to earnings more quickly. Tech, on the other hand, has better pricing power and higher-margin business models, which can absorb shocks more easily, especially the larger names. That said, I still expect to see some short-term weakness in demand for certain hardware and components, especially where there's exposure to export restrictions or regulatory uncertainty.
If you haven’t already, be sure to check out my Q1 Coverage:
I will be covering names that I haven’t done so before, and I, of course, haven’t mentioned my expectations for each company that I’ll be looking at within this article. Nevertheless, I hope it’s prepared you for the upcoming earnings season. As always, thank you for reading, and if you enjoyed it, feel free to subscribe for more.
Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice. The views expressed are my own and based on publicly available information, market trends, and personal analysis. Readers should conduct their own research and consult a financial professional before making any investment decisions.