The durability of the AI rally remains in focus as the earnings season tests chip-sector valuations after a blistering advance this year. Semiconductor stocks fell across Asia on Thursday, dragging regional equities lower, as investors grew more skeptical that the artificial intelligence-driven rally can withstand lofty valuations.

“While overseas fab ramps and N2 expansion will temporarily weigh on gross margin, these investments are essential to support long-term growth,” Counterpoint Research senior analyst William Li wrote. “TSMC also reaffirmed its capacity expansion plans across Taiwan, Arizona, and Japan, including both advanced and mature node capacity, to address the surging demand coming in the next few years.”