TSMC Posts Record Quarter and Doubles Down on US Expansion, but Margin Outlook Caps the Rally
Published on 07/20/2026 at 16:35 | Redaktion boerse-global.de
Taiwan Semiconductor Manufacturing Co. delivered a second-quarter earnings beat that would normally send shares flying — net profit surged 77.4% year-on-year to roughly $22.3 billion, while revenue hit $40.2 billion, up 36% from a year earlier. The gross margin touched a record 67.7%, and management lifted its full-year 2026 revenue growth forecast from over 30% to just above 40%. Yet the initial market reaction was a 3.21% drop in the stock’s European listing to €347, as investors zeroed in on the cost of that growth.
The immediate headwind is a familiar one: the ramp-up of next-generation manufacturing. TSMC’s 2-nanometer process is set to become a meaningful revenue contributor in the third quarter, with the company guiding for sales between $44.6 billion and $45.8 billion. But bringing that node to scale will compress gross margins by three to four percentage points in the second half of the year, according to management. Higher capital expenditure — the 2026 budget has been raised from roughly $56 billion to a range of $60 billion to $64 billion — adds to the near-term squeeze.
None of that has deterred TSMC from pressing ahead with its most ambitious overseas bet yet. Chief Financial Officer Wendell Huang confirmed an additional $100 billion investment in the company’s Arizona operations, bringing total planned spending in the state to $265 billion. The buildout now envisions up to twelve fabrication plants, two packaging facilities and a research center. The first fab is already running at yields comparable to those in Taiwan; the second is in the equipment-installation phase, and the third is under construction. Huang stressed that AI demand is a structural multi-year phenomenon that should last at least through 2030, though he acknowledged that manufacturing in the US remains four to five times more expensive than in Taiwan. Advanced processes will continue to be ramped in Taiwan first.
Should investors sell immediately? Or is it worth buying TSMC?
The stock’s gyrations in the past week reflect the tension between record results and rising costs. A broader Asian sell-off — triggered by a deleveraging wave in South Korea that spilled over into Taiwan — pushed TSMC down 7.29% last Friday, with foreign investors dumping net 189 billion Taiwan dollars’ worth of shares in a single session. That pulled the Taiex into a technical correction, down 6.47% on the day. But by Monday, local buying had steadied the ship: TSMC recouped 2.4% to close at 2,345 Taiwan dollars, back above its 60-day moving average. In Europe, shares later pushed to €355, up 2.31% on the day. The relative strength index, which had fallen to 37.7 in the aftermath of the earnings release, recovered to 41.8 — a neutral reading that leaves room for further stabilization.
The longer-term picture remains overwhelmingly bullish in the eyes of sell-side analysts. Macquarie raised its price target on the Taiwan-listed shares to 4,200 Taiwan dollars, while Citi set a target of 3,800, Goldman Sachs 3,100, Daiwa 3,000, and Morgan Stanley 2,988. All maintain the view that the AI-driven semiconductor upcycle has years to run. High-performance computing for AI applications already accounted for 66% of TSMC’s quarterly revenue. Management’s confidence extends to the next frontier: the A14 process at the 1.4-nanometer node has shown internal improvements in performance and yield. Risk production is slated for 2027, with volume manufacturing following in 2028, promising a 10–15% performance boost or a 25–30% power reduction at the same frequency compared with the current N2 technology.
For now, the market is digesting the tension between a record-breaking present and a capital-intensive future. TSMC’s shares remain roughly 15% below their 52-week high of €420.50, reached on July 1, and are still trailing their 50-day moving average by about 4% in Europe. But with a sharply upgraded full-year outlook and an unrivaled technology roadmap, the current weakness looks more like a pause than a reversal — provided the margin erosion proves as contained as promised.
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