Taiwan Semiconductor Manufacturing (NYSE:TSM) Announces Quarterly Earnings Results, Beats Estimates By $0.46 EPS

Key Points

• TSMC beat quarterly expectations, reporting EPS of $4.28 versus the $3.82 consensus and revenue of $39.89 billion, slightly ahead of forecasts. The company also posted strong profitability metrics, including a 46.97% net margin and 36.81% return on equity.
• The company said AI demand remains exceptionally strong and raised its full-year 2026 revenue growth outlook to slightly above 40% in U.S. dollar terms. Management also lifted Q3 revenue guidance to $44.6 billion-$45.8 billion, above consensus.
• TSMC increased its 2026 capital spending budget to $60 billion-$64 billion and announced an additional $100 billion investment in Arizona to expand advanced chip and packaging capacity. Management noted that the 2nm ramp will pressure margins in the second half of the year.

Taiwan Semiconductor Manufacturing (NYSE:TSM - Get Free Report) issued its quarterly earnings results on Thursday. The semiconductor company reported $4.28 EPS for the quarter, beating analysts' consensus estimates of $3.82 by $0.46, FiscalAI reports. Taiwan Semiconductor Manufacturing had a net margin of 46.97% and a return on equity of 36.81%. The business had revenue of $39.89 billion for the quarter, compared to analysts' expectations of $39.85 billion.

Here are the key takeaways from Taiwan Semiconductor Manufacturing's conference call:

• TSMC reported Q2 revenue of $40.2 billion at the high end of guidance, with gross margin of 67.7% and strong demand driven by leading-edge process technologies.
• The company raised its full-year 2026 revenue growth outlook to slightly above 40% in U.S. dollar terms, citing exceptionally strong AI-related demand and broad customer support.
• TSMC increased its 2026 capital budget to $60 billion-$64 billion and announced an additional $100 billion investment in Arizona to expand 2nm-and-below logic and advanced packaging capacity.
• Management said the 2nm ramp will pressure margins by roughly 3-4 percentage points in the second half, and Q3 gross margin is expected to ease to about 66% at the midpoint due to this mix shift and overseas fab dilution.
• Executives emphasized that AI demand remains extremely robust, including emerging agentic AI use cases, and said they expect this trend to support strong multi-year growth across CPUs, GPUs, and other leading-edge chips.

Taiwan Semiconductor Manufacturing Trading Down 0.2%

TSM opened at $419.43 on Thursday. Taiwan Semiconductor Manufacturing has a fifty-two week low of $223.70 and a fifty-two week high of $479.00. The firm has a market capitalization of $2.18 trillion, a PE ratio of 34.89, a P/E/G ratio of 1.05 and a beta of 1.36. The company has a debt-to-equity ratio of 0.16, a current ratio of 2.49 and a quick ratio of 2.31. The company's 50-day moving average is $427.18 and its 200 day moving average is $377.06.

Taiwan Semiconductor Manufacturing Increases Dividend

The firm also recently announced a quarterly dividend, which will be paid on Thursday, October 8th. Investors of record on Wednesday, September 16th will be issued a $1.1136 dividend. The ex-dividend date is Wednesday, September 16th. This represents a $4.45 dividend on an annualized basis and a dividend yield of 1.1%. This is a boost from Taiwan Semiconductor Manufacturing's previous quarterly dividend of $0.95. Taiwan Semiconductor Manufacturing's dividend payout ratio (DPR) is currently 24.71%.

Analyst Upgrades and Downgrades

A number of research analysts have recently issued reports on the company. Citigroup reissued a "buy" rating on shares of Taiwan Semiconductor Manufacturing in a research note on Monday, July 6th. Weiss Ratings cut Taiwan Semiconductor Manufacturing from a "buy (b-)" rating to a "hold (c+)" rating in a research note on Monday. Needham & Company LLC lifted their target price on Taiwan Semiconductor Manufacturing from $410.00 to $480.00 and gave the stock a "buy" rating in a report on Thursday, April 16th. Bank of America boosted their price target on Taiwan Semiconductor Manufacturing from $490.00 to $590.00 and gave the company a "buy" rating in a research note on Wednesday, June 24th. Finally, DA Davidson reissued a "buy" rating and issued a $450.00 price target on shares of Taiwan Semiconductor Manufacturing in a research note on Friday, April 17th. Two equities research analysts have rated the stock with a Strong Buy rating, eleven have assigned a Buy rating and three have assigned a Hold rating to the company. According to MarketBeat, Taiwan Semiconductor Manufacturing has a consensus rating of "Moderate Buy" and an average target price of $449.38.

Key Stories Impacting Taiwan Semiconductor Manufacturing

Here are the key news stories impacting Taiwan Semiconductor Manufacturing this week:

• Positive Sentiment: TSMC posted record Q2 profit, beat revenue and profit estimates, and said AI demand is still driving growth. Reuters: TSMC Q2 profit jumps 77% to record, far surpasses expectations
• Positive Sentiment: The company raised its Q3 revenue guidance to $44.6 billion-$45.8 billion, above consensus, signaling continued momentum.
• Positive Sentiment: TSMC expanded its Arizona plan by another $100 billion, lifting total U.S. investment to $265 billion and strengthening its role in advanced 2nm and AI chip production. Seeking Alpha: Wall Street Breakfast Podcast: TSMC Chips In $100B More
• Neutral Sentiment: Analysts and investors are weighing whether the company’s already-strong results and AI outlook were fully priced in, with some commentary pointing to “exceptionally high” expectations and profit-taking. MarketWatch: TSMC posts record quarter — but expectations are now exceptionally high
• Negative Sentiment: Chip stocks across Asia fell on caution that the AI trade may have become crowded, creating a broader sector sell-off that is weighing on TSM as well. Reuters: TSMC Q2 profit jumps 77% to record, far surpasses expectations

Insider Buying and Selling at Taiwan Semiconductor Manufacturing

In related news, VP Bor-Zen Tien acquired 2,000 shares of the firm's stock in a transaction on Tuesday, May 19th. The stock was purchased at an average cost of $69.91 per share, with a total value of $139,820.00. Following the acquisition, the vice president owned 11,051 shares of the company's stock, valued at approximately $772,575.41. This trade represents a 22.10% increase in their position. The purchase was disclosed in a filing with the SEC, which can be accessed through this hyperlink. Also, VP Tzu-Sou Chuang sold 200,000 shares of the stock in a transaction that occurred on Tuesday, May 19th. The stock was sold at an average price of $69.83, for a total value of $13,966,000.00. Following the completion of the sale, the vice president directly owned 2,495,165 shares of the company's stock, valued at approximately $174,237,371.95. This trade represents a 7.42% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. In the last quarter, insiders purchased 6,857 shares of company stock worth $512,334. Insiders own 1.11% of the company's stock.

Hedge Funds Weigh In On Taiwan Semiconductor Manufacturing

Large investors have recently bought and sold shares of the stock. Van ECK Associates Corp raised its holdings in shares of Taiwan Semiconductor Manufacturing by 11.1% in the fourth quarter. Van ECK Associates Corp now owns 17,464,962 shares of the semiconductor company's stock valued at $5,307,428,000 after purchasing an additional 1,750,824 shares during the last quarter. Bank of America Corp DE boosted its holdings in Taiwan Semiconductor Manufacturing by 6.5% during the fourth quarter. Bank of America Corp DE now owns 15,902,819 shares of the semiconductor company's stock worth $4,832,708,000 after purchasing an additional 966,926 shares during the last quarter. Coatue Management LLC boosted its holdings in Taiwan Semiconductor Manufacturing by 6.9% during the fourth quarter. Coatue Management LLC now owns 8,629,524 shares of the semiconductor company's stock worth $2,622,426,000 after purchasing an additional 556,988 shares during the last quarter. Schroder Investment Management Group grew its position in Taiwan Semiconductor Manufacturing by 0.5% in the 4th quarter. Schroder Investment Management Group now owns 7,251,510 shares of the semiconductor company's stock worth $2,203,661,000 after purchasing an additional 37,035 shares in the last quarter. Finally, Northern Trust Corp grew its position in Taiwan Semiconductor Manufacturing by 3.0% in the 4th quarter. Northern Trust Corp now owns 6,620,155 shares of the semiconductor company's stock worth $2,011,799,000 after purchasing an additional 193,089 shares in the last quarter. 16.51% of the stock is currently owned by institutional investors.

About Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing Company (TSMC) is a leading pure-play semiconductor foundry that provides wafer fabrication and related services to the global semiconductor industry. Founded in 1987 by Morris Chang and headquartered in Hsinchu, Taiwan, TSMC manufactures integrated circuits on behalf of fabless and integrated device manufacturers, offering contract chip production across a broad set of technologies and products.

TSMC's service offering covers logic and mixed-signal process technologies, specialty processes for radio-frequency, power management and embedded memory, and advanced nodes used in mobile, high-performance computing and AI applications.

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