TSMC's Earnings Streak Continues on Robust AI Demand

By Sherry Qin

Taiwan Semiconductor Manufacturing Co. posted its fifth straight quarter of record earnings amid voracious global appetite for artificial-intelligence infrastructure, showing that its optimism about the industry's prospects isn't misplaced.

The world's largest contract chip maker said Thursday that its quarterly net profit jumped 77% from a year earlier to 706.56 billion New Taiwan dollars, equivalent to US$21.98 billion. That far exceeded analysts' expectation of NT$624.00 billion, according to a FactSet consensus estimate. Revenue climbed 36% to NT$1.270 trillion, in line with the company's guidance.

The robust results for Asia's most valuable company, a major advanced chip manufacturer for technology heavyweights like Apple and Nvidia, are the latest sign that AI demand remains healthy, and might be what the market needs to quell mounting concerns about AI overspending.

TSMC's margins reached another milestone after hitting their highest level in more than 20 years in the first three months of the year. Its gross margin rose to 67.7% in the second quarter as high utilization rates and improved efficiency offset rising depreciation and dilution from its 2-nanometer production ramp-up.

The Taiwanese company's strong performance echoed a similar result at semiconductor-equipment giant ASML. The Dutch group, which makes the extreme ultraviolet lithography machines required to manufacture the industry's most cutting-edge chips, on Wednesday raised its annual sales outlook to the equivalent of between US$49.3 billion and US$51.6 billion, pointing to "extremely strong" AI-driven tool orders.

Shares of Taipei-listed TSMC gained momentum in the second quarter, rising 37% to take year-to-date gains to nearly 60%. Citi Research raised TSMC's target price to NT$3,800 from NT$2,875 earlier this month, citing sustained demand for its leading-edge chips and improving visibility in the longer term.

TSMC has said it is capacity-constrained, and that it is accelerating capacity expansion in both advanced nodes and chip packaging.

Addressing concerns about losing advanced-node market share to major rivals like Samsung and Intel, Chief Executive C.C. Wei in June said TSMC's technological leadership, manufacturing efficiency and customer trust will keep it firmly in the lead.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

July 16, 2026 01:58 ET (05:58 GMT)