TSMC is about to answer Wall Street's biggest AI question
TSMC is about to answer Wall Street's biggest AI question.
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Few companies have a clearer view of where the AI boom is heading than TSMC. And of course, with that, investors increasingly look to the company for answers.
Earlier in June, speaking at the company's annual shareholders' meeting in Hsinchu, Taiwan, CEO C.C. Wei was precise and notably candid.
Wei said this, according to a Bloomberg report, while reiterating a forecast of more than 30% annual sales growth for 2026.
The gap between those two statements, extraordinary growth already baked in and demand still exceeding what the company can produce, is the most important thing investors need to understand about TSMC heading into its July 16 second-quarter earnings report.
Taiwan Semiconductor Manufacturing ( TSM ) trades at $418.93 as of this reporting. Stock is also up 40.35% year to date, according to Yahoo Finance . A fifth consecutive quarter of record earnings is widely and highly expected. The question is by how much.
Also Read: Taiwan Semiconductor Manufacturing Company Ltd Latest News and Stories
Before the earnings report arrives, the monthly revenue data has already provided a meaningful preview, and what it shows is unusually constructive.
TSMC's June revenue jumped 68% year over year, according to TSMC 's report. That is the fastest monthly revenue growth the company has reported all year, well above the 45% year-over-year increase in March, TSMC reports. The sequential behavior even makes it more notable. June revenue grew 6.2% from May. TheStreet 's previous report shows TSMC's June revenue has declined sequentially from May in each of the past four years.
TSMC's June revenue jump breaks a four-year seasonal pattern
The shift matters because it signals that demand is not following seasonal norms. AI infrastructure spending is running hot enough to override what has historically been a slower summer month for the world's largest contract chipmaker.
The Zacks consensus estimate for Q2 EPS is at $3.77 per share, up 52.6% year over year. Revenue consensus sits at approximately $39.8 billion, representing 32.2% year-over-year growth.
TSMC 's own Q2 guidance called for revenue between $39.0 billion and $40.2 billion, with gross margins of 65.5% to 67.5% and operating margins of 56.5% to 58.5%.
Given the June revenue momentum, we have a credible case for TSMC beating both the consensus and its own midpoint guidance.
The Q1 2026 results provide the earnings baseline that the Q2 report needs to build on, according to TSMC 's earnings release.
Revenue was $35.90 billion in U.S. dollar terms, up 40.6% year over year and 6.4% from Q4 2025.
Gross margin was 66.2%, operating margin was 58.1%, and net profit margin was 50.5%.
Advanced technologies, defined as 7-nanometer and more advanced, accounted for 74% of total wafer revenue, with 3-nanometer chips alone representing 25%.
