TSMC posts record quarter - but expectations are now 'exceptionally high,' says fund manager

By Nora Redmond

Taiwan Semi to boost investment in the U.S.

Taiwan Semiconductor Manufacturing Corp. (TSMC) reported a 77% jump in profit in its most recent quarter.

Shares in Taiwan Semiconductor Manufacturing Corp., or TSMC, declined on Thursday as investors likely sought to gain profit after a record quarter for the chipmaker giant, with expectations for the stock now "exceptionally high," a fund manager warned.

The $2 trillion company reported a 77% boost in profit to a record high 706.6 billion new Taiwanese dollars ($22 billion) in its second quarter - far surpassing analysts' estimates of 624 billion new Taiwanese dollars, according to data collected by FactSet.

Earnings per share for the period came in at 27.25 new Taiwanese dollars, above forecasts of 24.20 new Taiwanese dollars, according to FactSet.

Revenue - which the company had reported on Monday - rose 34% to $40.2 billion.

Despite the beat, shares in TSMC (TSM) (TW:2330)dropped close to 4% in pre-market trading in New York, indicating market participants may have sold the good news to lock in profits.

TSMC American depository receipts have climbed 77% since this time last year as the world's largest maker of semiconductor chips has proved invaluable to the build-out of artificial intelligence as customers including Apple and Nvidia accelerate the race to dominate in the industry.

"AI related demand continues to be extremely robust," CEO C.C. Wei said in the company's second-quarter earnings call.

He also announced an additional investment of $100 billion in Arizona, bringing its total commitment to $265 billion, to expand manufacturing in the U.S. amid a boom in demand.

TSMC posted a revenue outlook of between $44.6 billion and $45.8 billion for the following quarter, up from its forecast of $39 billion to $40.2 billion for the second quarter. Analysts polled by FactSet had estimated revenue of $43.67 billion.

Ricky Ho, who manages the Singapore-based Four Capital Fund, wrote in a post on X that investors should think about how expectations for the company are now "exceptionally high."

"Future share price appreciation will increasingly depend on management continuing to outperform already elevated expectations rather than simply delivering strong growth," he said. "For now, however, the company continues to justify that premium through world-class execution and unrivaled technological leadership."

-Nora Redmond

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

07-16-26 0532ET