🥛 AI's biggest winner isn't who you think 💎

GM. This is Milk Road AI, your daily cheat sheet for the AI revolution. We filter out the noise, roast the losers, and high-five the winners.

Here’s what we’ve got for you today:

✍️ The AI "Ghost Kitchen" printing money.
🎙️ The Milk Road AI Show: This AI Infrastructure Stock Has a Massive Head Start w/ Duncan & Patrick
🍪 OpenAI is starting to test targeted ads in ChatGPT.

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THE AI ARMS RACE IS FUNDING A MONOPOLY

In 1848, a man named Samuel Brannan ran through the streets of San Francisco shouting a secret.

"Gold! Gold on the American River!"

But he didn't dig for gold. He didn't own a mine.

He owned the only store in town that sold pickaxes and shovels.

He bought every single shovel in the region for pennies and sold them to desperate prospectors for a 5,000% markup.

He became the richest man in California, while the miners were left holding the bag (literally, a bag of dirt).

Source: Giphy

History is repeating itself, but instead of pickaxes, we are buying silicon.

And right now, TSMC (Taiwan Semiconductor Manufacturing Company) is the Samuel Brannan of the AI world.

While OpenAI, Google, and Meta are fighting a cage match to build the smartest AI, TSMC is quietly sitting in the corner, counting stacks of cash and selling the shovels.

But wait, what does TSMC actually do?

If you aren't a chip nerd, think of TSMC like the world's most expensive “ghost kitchen”, as in a dark gloomy kitchen where they only cook for delivery.

To understand how this kitchen works, you have to look at the whole food chain.

Source: @samsolid57

At the top, you have the “ Chefs ” (Microsoft, Meta, Google) who are spending ~$600B in 2026 to build data centers, they are the ones writing the checks.

They hire the “Architects” (Nvidia, AMD) to draw the blueprints for the chips and take all the glory.

But the Architects don't cook.

They send those blueprints to the “ Kitchen ” (TSMC), one of the only factories on Earth capable of cooking the food.

So, who is their competition?

You might be thinking, "Surely someone else can make a microchip, right?"

Well, yes, but also, no.

TSMC controls a staggering 72% of the global market. It's very lonely at the top.

Samsung is trailing way behind at just 7%, despite years of promises to close the gap.

And Intel? Intel is fighting tooth and nail to claw its way back.

But watching Intel try to pivot to foundry services right now is like watching your dad try to learn TikTok dances.

You root for him, but it’s a little painful to watch.

But let's be real: right now, this is TSMC's world, everyone else is just paying rent.

Source: @jimmys_journal

But paying rent doesn't guarantee you a spot at the head of the table.

The shovel seller has a supplier

For 15 years, Apple was the king.

They spent $24B at TSMC in 2025 alone, sat at the head of the table, and ate first.

But according to Morgan Stanley, the king has been dethroned.

Here is the projected 2026 revenue mix:

Nvidia: 20% (The new king).
Apple: 16% (The runner-up).
Broadcom: 11%.
AMD: 8%.

Source: @rohanpaul_ai

When you aren't #1 anymore, you lose privileges.

Apple used to walk in and get the best table by the window.

Now? They're getting told there's a 45-minute wait and they might have to sit at the bar near the bathroom.

And because of this, Apple could face higher prices, fewer guaranteed spots in line, and less flexibility when AI demand spikes even further.

Rumors are already swirling that Apple is flirting with Intel to build future Mac chips.

And when you have trillion-dollar companies fighting for a reservation, the financial results get absolutely insane.

TSMC just had their Q4 earnings this week, and they crushed it.

They literally went full John Wick on the estimates. (With a pencil. A freaking pencil.)

Total sales hit $33.73B and grew 25.5% compared to last year.

Then there is the profit. They took home $16.3B in net income, a 35% jump.

Source: Fiscal(.)ai

But the scariest number isn't what they made. It's what they are about to spend.

TSMC just raised their 2026 CapEx to $52–56B .

But there is a twist, TSMC isn't the only winner.

If TSMC is the guy selling the shovels, who makes the shovels?

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THE AI ARMS RACE IS FUNDING A MONOPOLY (P2)

Enter ASML (Advanced Semiconductor Materials Lithography).

If you think TSMC is dominant, wait until you meet ASML.

ASML makes Extreme Ultraviolet (EUV) Lithography machines.

They are school-bus-sized machines that blast molten tin with lasers to carve patterns into silicon.

Source: Extremetech

To create the light needed for these chips, their machines create a plasma that is 40x hotter than the surface of the sun (220,000°C).

Or, roughly the temperature of the cheese inside a Hot Pocket that you just took out of the microwave.

ASML has a 100% monopoly.

Nobody else on Earth knows how to make them. There is no "Plan B".

Why? Because it comes down to simple physics.

ASML’s machines are the only ones capable of generating the specific wavelength of light (Extreme Ultraviolet) needed to print circuits at the 3nm and 2nm scale.

Older technology hits a hard physical limit, it literally cannot draw lines thin enough to pack the billions of transistors needed for an AI superchip.

Because TSMC is ramping up spending to $56B, analysts estimate they are buying 30 more of these machines, sending ASML's stock surging past a $500B valuation.

They are now the third most valuable company in Europe, sitting at the cool kids' table with LVMH and Novo Nordisk.