Record Quarter Fueled by AI Demand
TSMC reported a 77.4% year-on-year jump in net profit for the April-to-June quarter, marking a record high for a fifth consecutive quarter, according to CNBC. Revenue surged 36% from a year earlier to NT$1.27 trillion, while earnings per ADR share came in at $4.31, topping the consensus estimate of $3.82 by $0.49. The company guided third-quarter revenue between $44.6 billion and $45.8 billion, implying approximately 37% year-on-year growth. Ccnbc
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Management raised full-year 2026 revenue growth guidance from “above 30%” to “slightly above 40%” in U.S. dollar terms and boosted capital expenditure plans to $60–64 billion, up from the prior $52–56 billion range set in January. TSMC also announced an additional $100 billion investment commitment in Arizona. Ttrendforce
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Morgan Stanley Flags Margin Headwinds
In its note, Morgan Stanley said the capex increase partly reflects equipment price inflation, estimating TSMC may need to spend an additional $3 billion due to roughly a 5% rise in equipment costs. The bank warned that near-term margins will face pressure from the ramp-up of 2nm production and dilution from overseas fabs, with third-quarter gross margins expected to dip temporarily to the 65%–67% range. Pphemex
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Morgan Stanley suggested a 70%–80% compound annual growth rate for TSMC’s AI semiconductor business is reasonable, above the company’s prior 55%–60% forecast. The firm also expects TSMC to raise leading-edge wafer prices by 5–10% in 2027, supported by strong demand and its position as ASML’s largest EUV customer. TrendForce reported that TSMC is already eyeing up to a 15% price hike on 3nm in the second half of 2026, with a further 5%–10% increase in 2027. Ttrendforce
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Broader Analyst Upgrades
Morgan Stanley’s new NT$2,988 target implies roughly 20x estimated 2027 earnings. The firm was among several brokerages raising targets after the earnings call, with at least one Asian house setting a bull-case target as high as NT$4,200. TSMC shares rose 1.23% on Thursday following the results, extending year-to-date gains to over 58%. BBiggo
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