TSMC Q2 Earnings Approach: AI Demand, Gross Margin and Capex Become Key Market Focuses

Based on current market expectations, TSMC's second-quarter performance is highly likely to continue its rapid growth trend. The market expects the company's Q2 revenue to reach NT$1.27 trillion (approximately $39.47 billion), representing a 36% year-on-year increase.

In fact, TSMC's previously released June revenue has already sent a positive signal in advance. The company achieved revenue of NT$442.68 billion in June, up approximately 26% year-on-year and 6.2% month-on-month.

Therefore, for investors, revenue growth alone is no longer the main focus. As AI demand continues to drive orders for TSMC's advanced nodes, the market is paying closer attention to the company's quality of earnings, especially its gross margin performance.

Wall Street currently expects TSMC's second-quarter gross margin to be around 67%, up by more than 8 percentage points year-on-year and at the high end of the company's previous guidance range of 65.5% to 67.5%. Some institutions are even more optimistic, predicting that TSMC's Q2 gross margin could reach nearly 70%.

If TSMC can once again deliver gross margin figures that beat market expectations, it will further demonstrate the company's strong pricing power in advanced nodes, while also implying that high-end AI chip orders are helping the company offset cost pressures from capacity expansion.

Conversely, if the gross margin falls short of market expectations, even if revenue growth remains strong, investors may still worry that future profit margins will be dragged down by the costs of capacity expansion and overseas footprint.

Rather than the quarterly results themselves, the market is focusing more on TSMC management's assessment of future AI demand.

Currently, AI chip companies such as Nvidia, AMD, and Broadcom are all key customers of TSMC. As the scale of artificial intelligence models expands and cloud computing providers continue to increase investments in AI infrastructure, demand for high-performance computing chips continues to grow rapidly.

The market believes that demand for AI accelerators, custom ASIC chips, server CPUs, and HBM-related supporting chips remains in an expansion phase. Having consecutively raised its earnings guidance previously, TSMC is expected by investors to further upgrade its full-year growth target during this conference call, thereby proving that the AI hardware buildout cycle still has strong sustainability.

If management only maintains its previous target of "full-year revenue growing by more than 30% year-on-year," although it indicates stable business, it may fall short of some investors' expectations for a further guidance upgrade. Conversely, if the company releases a more positive demand outlook, it is expected to serve as a key catalyst to drive the stock price back up.

Currently, TSMC maintains its leading edge in the 3nm process node, with related capacity remaining fully utilized, while the advancement speed of its next-generation 2nm process will directly impact the company's growth potential over the next few years.

The market expects that TSMC's 2nm process is entering the volume production ramp-up phase, and investors hope that management can disclose more information regarding yield improvement, customer adoption, and capacity expansion during the earnings call.

Meanwhile, demand for AI chips is not only driving the growth of advanced logic processes but also propelling the rapid expansion of the advanced packaging business. Among these, CoWoS packaging technology has become a crucial link connecting GPUs and HBM, with clients such as Nvidia currently showing robust demand for the related capacity.

If TSMC can confirm that its CoWoS capacity expansion is progressing smoothly and that orders for advanced processes continue to increase, it will further bolster market confidence in the long-term growth potential of the AI supply chain.

Meanwhile, capital expenditure is also a key metric to watch in this earnings report.

TSMC previously projected its 2026 capital expenditures to be between $52 billion and $56 billion, noting that the figure would approach the upper end of the range. Some institutions believe that as AI chip demand continues to strengthen and demand for advanced capacity from global customers keeps rising, the company may further expand its investment scale in the future.

The market expects TSMC's capital expenditures to approach around $58 billion to support the expansion of advanced node capacity, the buildout of advanced packaging, and its overseas manufacturing footprint.

Currently, TSMC is moving forward with a large-scale fab investment plan in Arizona, US, while continuing to expand its advanced manufacturing bases in Taiwan. Although the construction of overseas fabs will bring certain cost pressures and may impact its overall gross margin over the next few years, in the long term, these investments will help the company consolidate its core position in the global semiconductor supply chain.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.