TLDR
- TSMC Q2 net profit jumped 77% year-over-year to $22 billion, beating Wall Street estimates
- Revenue rose 36% year-over-year to $40.2 billion in Q2 2026
- TSMC announced an additional $100 billion U.S. investment, bringing total U.S. commitment to $265 billion
- ADRs fell 4.2% in premarket trading Thursday despite the earnings beat
- Gross margin hit 67.7% in Q2, with advanced 7nm-and-below chips making up 77% of wafer revenue
Taiwan Semiconductor Manufacturing (TSM) posted record Q2 profits on Thursday, but the stock dropped in premarket trading after the company announced a massive expansion of its U.S. manufacturing plans.
$TSM | TSMC Q2’26 Detailed Earnings Highlights
🔹 Revenue: $40.2B; +33.7% YoY
🔹 Net Profit: $22.36B (Est. $19.74B) 🟢; +77.4% YoY
🔹 Gross Margin: 67.7% (Est. 67.1%) 🟢
🔸 CapEx raised to $60B-$64B from $52B-$56B.Q3’26 Guide:
🔹 Rev: $44.6B-$45.8B (Est. $43.11B) 🟢; +37% YoY… pic.twitter.com/jrlDLJmOi7— Wall St Engine (@wallstengine) July 16, 2026
TSM ADRs were down 4.2% in premarket Thursday.
Taiwan Semiconductor Manufacturing Company Limited, TSM
TSMC reported Q2 net profit of NT$706.56 billion ($22 billion), up 77% from a year earlier. That beat analyst forecasts of NT$626.82 billion.
Revenue for the quarter came in at $40.2 billion, up 34% year-over-year. The company had previously guided for full-year revenue growth of more than 30%.
Advanced chips drove the results. Technologies at 7nm and below made up 77% of total wafer revenue in Q2. The 5nm process was the biggest contributor at 33%, followed by 3nm at 30%, and 2nm at 3% as production ramps up.
Gross margin came in at 67.7%, supported by high factory utilization. Operating margin was 60.3% and net profit margin reached 55.6%.
The strong margins came despite higher costs tied to TSMC’s 2nm production ramp, which is still in early stages.
$265 Billion U.S. Commitment
Alongside earnings, TSMC said it will invest an additional $100 billion in U.S. semiconductor fabrication plants in Arizona. That takes its total U.S. investment pledge to $265 billion, up from a prior commitment of $165 billion.
The expanded spending is what appears to be weighing on the stock. Investors may want reassurance that chips made in the U.S. can eventually match the margins of those produced in Taiwan.
TSMC supplies chips to Nvidia, Apple, Qualcomm, and AMD. Nvidia remains the key driver given surging demand for AI processors.
Competition With Intel
Intel currently pays TSMC to manufacture around 30% of its wafers. But Intel, which has received U.S. government backing, is working to attract outside customers to its own chip manufacturing services — putting it in direct competition with TSMC for contracts.
Analysts at Jefferies had predicted TSMC could raise its full-year revenue growth outlook to the 30%-35% range ahead of earnings.
According to TipRanks, TSM carries a Strong Buy consensus based on five analyst buys in the past three months. The average price target of $520 implies roughly 24% upside from current levels.
TSM ADRs have gained 77% over the past 12 months.
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