TSMC's Record Quarter Overshadowed by $100 Billion US Expansion Plan

TSMC's record Q2 net profit of $22B and raised revenue forecast are overshadowed by a massive $60-64B 2026 capex plan and $265B US commitment, triggering a 3% stock dip.

Taiwan Semiconductor Manufacturing delivered a stellar second quarter, with net profit surging 77.4% to roughly $22 billion on revenue of $40.2 billion. Gross margin hit 67.7% and operating margin reached 60.3% — the foundry's fifth straight quarter of record profitability. Yet the stock slipped 3.21% on Friday as investors digested a capital spending plan that dwarfs anything the industry has seen.

The market's reaction centered on TSMC's decision to hike its 2026 capex forecast to $60–64 billion from an earlier range of $52–56 billion, and to commit an additional $100 billion to its Arizona site. The total US outlay now stands at $265 billion. CEO C.C. Wei called it the largest foreign direct investment in American history, and the company outlined plans for three new chip fabrication plants in the state, along with two advanced packaging facilities and a research center. The second US fab is slated to start production in the second half of 2027, while the third won't come online until late in the decade. At the same time, TSMC is building 13 new fabs in Taiwan and expanding in Japan and Germany, a global push that it acknowledges will shave 2–3 percentage points off gross margins initially and 3–4 points at full scale.

Operationally, the growth story remains intact. High-performance computing — the segment that feeds AI processors — contributed 66% of revenue. Chips built on 7nm and smaller nodes accounted for 77% of wafer sales, and the company's cutting-edge 2nm technology already delivered 3% of revenue. Apple has reportedly locked up more than half of the coming 2nm capacity. For the third quarter, TSMC guided revenue between $44.6 billion and $45.8 billion, with gross margin in the 65–67% range and operating margin between 56% and 58%. Management lifted its full-year revenue growth forecast to above 40%.

Analysts remain broadly bullish despite the stock's pullback. Zacks Research upgraded TSMC to Strong Buy from Hold, while TD Cowen issued a Hold rating with a $440 price target, DA Davidson a Buy at $500, and Barclays an Overweight with a $650 target. The consensus price target stands at roughly $520 with a Strong Buy rating. Wedbush raised its target to 3,000 New Taiwan Dollars, and Needham set a $480 target. Yet caution is creeping in: Goldman Sachs warned that AI investment expectations may be overheated, and the Philadelphia Semiconductor Index slid into a technical bear market over the past week.

At the German trading venue, TSMC shares closed Friday at €347.00, down 7.71% over the past month and 17.48% below the 52-week high of €420.50 hit in early July. Despite the near-term damage, the stock has still gained 35.02% year to date, and the overwhelming majority of analysts see the company's technological lead and pricing power as intact. The tension lies between a business that is printing records and a strategy that requires swallowing short-term margin dilution to secure long-term dominance.