This week’s AI winners and losers

Yahoo Finance’s AI winners and losers provides a weekly snapshot of some of the biggest stories impacting the artificial intelligence industry. From chip manufacturers and model developers to software companies and politicians, we look at who has benefited from AI and who has stumbled.

This week’s AI winners: TSMC and China’s Moonshot AI

TSMC

Taiwan Semiconductor Manufacturing Co. (TSM) announced blowout earnings on Thursday and said it will increase spending to expand its US footprint. Second quarter revenue jumped 36% year over year, while net income rocketed 77.4% higher.

TSMC produces semiconductors for the world’s most influential tech companies, including Apple (AAPL), AMD (AMD), Nvidia (NVDA), and Qualcomm (QCOM). And the AI boom has paid off handsomely for the Taiwan-based manufacturer. Annual revenue has increased from $75.99 billion in 2022 to $122.56 billion in 2025.

According to CFO Wendell Huang, TMSC’s Q2 results were supported by strong demand, which he expects to continue into the current quarter as tech companies seek as many AI chips as they can get.

Moonshot AI

Moonshot AI on Friday revealed that its new Kimi K3 AI model has frontier-level capabilities. While it falls short in overall performance compared to state-of-the-art models like Anthropic’s (ANTH.PVT) Fable 5 and OpenAI’s (OPAI.PVT) GPT-5.6 Sol, K3 surpasses them on certain benchmark tests.

The announcement shows how quickly China’s AI companies are catching up with the most well-funded organizations in the US, and points to the major differences between their approaches to AI dominance.

Founder of Moonshot AI Yang Zhilin delivers a speech at a conference of 2026 Zhongguancun forum, in Beijing, China March 25, 2026. REUTERS/Tingshu Wang · REUTERS / REUTERS

Like China’s DeepSeek, Moonshot AI focuses on releasing open-weight models, or models that users can download for free and customize to their liking, while Anthropic, OpenAI, and Google (GOOG, GOOGL) focus on proprietary models that users must pay to access.

China’s AI companies also generally undercut Anthropic, OpenAI, and Google on usage pricing, making them more appealing to businesses that are looking to take advantage of AI but don’t want to shell out for access to Anthropic’s Claude, OpenAI’s GPT, or Google’s Gemini.

This week’s AI losers: IBM and the chip industry

IBM

Talk about a rough day. IBM (IBM) preannounced its Q2 earnings on Tuesday, warning investors that its revenue and earnings per share fell well below analysts’ expectations, as the company’s customers shifted their spending from its mainframe systems to AI servers and memory and storage chips.

Analysts had expected Big Blue to report adjusted earnings per share (EPS) of $3.02 on revenue of $17.86 billion, but the company says it came up short, posting adjusted EPS of $2.93 and revenue of $17.2 billion.

IBM CEO Arvind Krishna speaks during a celebration of Diwali event hosted by U.S. President Donald Trump in the Oval Office of the White House in Washington, D.C., U.S., October 21, 2025. REUTERS/Kevin Lamarque · REUTERS / REUTERS

That sent IBM stock plunging more than 25% on the day, Big Blue’s worst drop since at least 1968. Shares closed out the week down 26%.

But IDC’s Ashish Nadkarni, who leads the firm’s enterprise infrastructure global research group, wrote in a note that Wall Street’s reaction to CEO Arvind Krishna’s warning was likely stronger than warranted, though investors should keep the statement in mind.

“It may not mean the collapse of the mainframe business, but it does mean that IBM is not isolated from the strategic reallocation of enterprise budgets in order to address the acceleration of AI adoption,” he explained.

The chip industry

It’s been a rough week for the chip industry. The Philadelphia Semiconductor Index (^SOX) fell roughly 10% over the last five days, entering a bear market. Nvidia dropped nearly 4% on the week, and Intel (INTC) sank 13%. Memory and storage chipmaker SK Hynix (SKHY) fared better after making its US public market debut, declining less than 1%. Micron (MU) fell about 4%.

The issue? More concerns over AI spending and questions about how long the build-out that’s powered stocks and revenue to new highs will last. The declines came despite TSMC’s strong quarterly results and positive outlook.

It’s not yet clear if this is part of a larger trend or profit-taking from the massive gains in chip stock prices over the last few months.

The next major catalyst for the segment will come next week when Google and Intel announce their results on Wednesday and Thursday, respectively. Google could boost stocks if it provides commentary on continued spending, and Intel will give the market a better look at CPU and server sales.