TSMC Earnings Set to Test AI Chip Spending
TSMC earnings will test whether July revenue confirming strong AI demand justifies lofty profit and margin expectations and pressures Asian chip stocks.
KEY TAKEAWAYS
- July 13 revenue implied Q2 sales near $39.6B, at the upper end of company guidance.
- Consensus projects record net profit near $19.7B and ADR EPS around $3.82.
- Margins and customer commentary are the key read to judge AI capex durability.
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TSMC (Taiwan Semiconductor Manufacturing Co., NYSE: TSM) will report earnings on July 16 following a July 13 revenue release that implied second-quarter sales at the top of prior guidance. The results will test whether Big Tech will sustain the AI capital spending driving TSMC’s growth and have already pressured Asian chip stocks.
June Revenue Confirms Q2 Results
In a July 13 release, TSMC reported consolidated June net revenue of NT$442.7 billion, up 6.2% month-on-month and 67.9% year-on-year. Revenue for January through June totaled NT$2,404.5 billion, a 35.6% increase from the prior year. This implied second-quarter revenue of about $39.6 billion, a roughly 36.0% year-on-year rise that placed the quarter at the upper end of the company’s previous guidance [source:20].
Guidance, Margins, and Capital Spending
TSMC’s April 16 first-quarter results showed revenue of $35.9 billion, up about 41.0% year-on-year and 6.0%–6.4% sequentially. Gross margin was 66.2%, operating margin 58.1%, and net profit margin about 50.5%. Advanced technologies at 7 nanometers (nm) and below accounted for 74% of wafer revenue, with 3nm at 25%, 5nm at 36%, and 7nm at 13% [source:21].
The company guided second-quarter revenue to $39.0–40.2 billion, gross margin to 65.5–67.5%, and operating margin to 56.5–58.5%, assuming an exchange rate near NT$31.7 per US dollar. It forecast full-year 2026 revenue growth above 30% in U.S. dollar terms and set capital expenditure at $52–56 billion to expand advanced-node and AI capacity. Management warned that the ramp-up of 2nm technology and overseas fabs would initially reduce full-year gross margin by about 2–3 percentage points, rising to 3–4 points as international sites scale. The Arizona facility includes a Phase 1 4nm line and a Phase 2 target for 2nm production [source:21].
AI chip demand has driven recent growth, with TSMC leading as the foundry for advanced AI accelerators and CPUs. The company targets more than an 80% compound annual growth rate in CoWoS advanced packaging capacity from 2022 to 2027. Management has described this packaging capacity as effectively sold out, an issue analysts expect to be addressed for the second half of 2026 and 2027 [source:19].
Market Expectations and the AI Spending Test
Analysts largely aligned with the company’s revenue figure before the earnings release. Consensus forecasts project second-quarter net income of about $19.7 billion, a roughly 59.0% year-on-year increase, and average daily rate (ADR) earnings per share near $3.82. Some broker models anticipate gross margins near 68–69%, above the company’s guided range.
These elevated expectations have pressured Asian semiconductor equities. Ahead of the results, South Korea’s Kospi index fell 6.4%, SK Hynix dropped 11.0%, and Samsung Electronics declined more than 8.0%, while Taiwan’s broader semiconductor suppliers gained on the June revenue disclosure.
The second-quarter report will serve as a sector barometer. If TSMC meets profit forecasts, it would mark a fifth consecutive quarter of record earnings. Investors will scrutinize margins and customer commentary for signs that Big Tech plans to continue aggressive AI-chip investment, which underpins TSMC’s growth profile and heavy 2026 capital spending.
