Track market-moving stories before they get noisy

Taiwan Semiconductor's (TSM -0.64%) second quarter results were stellar. Revenue soared nearly 34% year over year, earnings per share jumped by 77%, and operating margin topped 60%. TSMC's 2nm process is ramping up, accounting for 3% of total wafer revenue so far, and advanced processes now generate more than three-quarters of total wafer revenue.

Booming demand for AI accelerators, CPUs, and other chips destined for AI data centers is maxing out TSMC's capacity, and the company is unable to keep pace. TSMC is ramping up capital spending, including a $100 billion commitment to its fabs in Arizona, but CEO C.C. Wei would only say during the earnings call that he expected "very strong" demand through 2030. It's unlikely that TSMC's supply will catch up with demand anytime soon.

Image source: Getty Images.

A golden opportunity for the competition TSMC dominates the foundry market, but the best demand environment the company has ever seen is opening a door for Intel (INTC -2.47%) and Samsung (SSNLF +0.00%). With TSMC unable to fully meet demand, chip designers are actively looking elsewhere.

Both Intel and Samsung are making progress chipping away at TMSC's lead. Intel and its Intel 14A process node are involved in Elon Musk's Terafab project, and the Wall Street Journal reported in May that Apple reached a preliminary deal to use Intel for manufacturing some chips. Just this week, Intel inked a deal with Fortinet to design, manufacture, and package a custom chip on the Intel 4 process. Momentum appears to be building, and Intel's push into custom chip design is helping the cause.

Samsung is also winning major customers, signing a major deal with Tesla last year to manufacture AI chips over multiple years. Other companies, including AMD and Alphabet, are reportedly considering Samsung for future products. Samsung could be churning out AMD's server CPUs and Alphabet's TPUs if it wins those deals.

Both Intel and Samsung have distinct advantages that TSMC can't match. For Intel, it's U.S. government support, via an equity stake and its status as the only U.S.-based advanced logic semiconductor manufacturer. For Samsung, it's a memory chip manufacturing business that is currently printing cash. Wei pointed to both in response to an analyst's question about the competition.

TSMC isn't going to lose its crown, but the AI boom that's delivering record profits is also giving a serious boost to the competition.

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Keep an eye on Intel Intel is scheduled to report its quarterly results on Thursday. The company is unlikely to announce specific foundry customer wins, but management has previously said that it expects to lock down multiple design wins this year as it ramps the Intel 18A process and continues work on the upcoming Intel 14A process.

Apple is one of TSMC's largest customers, and all signs point to the iPhone giant tapping Intel for at least some chip manufacturing. TSMC doesn't have the capacity to fully meet demand, so it's not losing business per se. However, Apple having a second supplier gives the company more leverage when TSMC floats price increases.

While TSMC is printing record profits, the company's era of complete and utter dominance may be slowly coming to an end.

Timothy Green has positions in Intel. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Fortinet, Intel, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Pressure from President Donald Trump to manufacture advanced semiconductors in the U.S. is increasing costs and squeezing margins at TSMC, the world's leading chipmaker.

Following Trump's return to power in 2025, the president has repeatedly threatened tariffs on companies that don't make their products in America.

Since then, TSMC has announced a total of $200 billion in commitments to the country, including last week's unveiling of a $100 billion investment into advanced semiconductor manufacturing and packaging facilities in the U.S.

While buoyed by the AI boom — TSMC's market cap has risen more than 100% in the past 12 months — blockbuster earnings this quarter were hit by overseas expansion, the company said.

TSMC stock.

Gross margin increased ahead of guidance, but that was offset by dilution from overseas fabs, CFO Wendell Huang said on an earnings call. Margins will be further diluted over the next "several years" as overseas fab projects "ramp-up", he added.

"President Trump's leadership is driving companies to invest in American manufacturing," said Commerce Secretary Howard Lutnick in a statement.

"TSMC's announcement of an additional $100 billion investment following our historic deal on trade and investment with Taiwan will create tens of thousands of American jobs and bring advanced semiconductor manufacturing back to America."

While other Asian chipmakers, including SK Hynix, are developing U.S. facilities, TSMC has made by far the largest commitment. Its aggressive U.S. expansion exposes it to higher production costs, creating a potential headwind for margins.

Political pressureTSMC on Thursday reported a 77.4% jump in second-quarter profit year on year, soaring past estimates and marking another record-breaking quarter for the world's largest contract-chipmaker.

It's also expanding aggressively in the U.S., as the company continues to see a "multi-year demand mega trend" from its customers, TSMC's Huang told CNBC.

Political pressure is another key driver of that overseas expansion.

"Trillions of dollars in investments by TSMC and other semiconductor companies are a result of President Trump's trade and economic policy, from a historic trade deal with Taiwan to renegotiated CHIPS program investments," a White House spokesperson told CNBC.

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Building in the U.S. is considerably more expensive.

"Broadly, we estimate TSMC's US chips to cost 20-50% more than those produced in Taiwan, depending on subsidy timing, tax credit recognition and other cost fluctuations," Phelix Lee, senior equity analyst at Morningstar, told CNBC. Lee added he expected customers to bear more of the higher costs of production.

TSMC is set to raise prices for both advanced and mature chip production by up to 10% in 2027, Nikkei reported on Tuesday. TSMC told CNBC it doesn't comment on pricing.

"What helps TSMC is lack of any material competition," Gaurav Gupta, VP analyst at Gartner, told CNBC.

Because of TSMC's dominance in the leading-edge node market, "a large part of the increased costs would have to be absorbed by its clients, who are looking to diversify or have mandates from the U.S government to purchase local chips," Gupta said.

Margins The company forecasts the gross margin dilution from the ramp-up of overseas fabs in the next several years to be 2% to 3% in the early stages, widening to 3% to 4% in the latter stages, Huang said.

"This is a margin difference TSMC can afford because of its very high overall margins," said Gil Luria, head of technology research at D.A. Davidson. TSMC's second-quarter gross margin was 67.7%, up slightly from 66.2% in the first quarter.

While Trump has doubled down on calls for homegrown manufacturing, "customers have increasingly sought geographical diversification after Covid disrupted the global supply chain," said Morningstar's Lee.

"Customers are bracing for geopolitical, logistical, and other disruptions to the supply chain," he added. "We expect made-in-US pressure to persist beyond Trump, although it is less clear how carrot-and-stick will be distributed."

Artificial intelligence is moving into a new phase. The first wave centered on building massive GPU clusters to train ever-larger models. Now the industry is broadening. Companies are investing in AI memory, networking, storage, and increasingly powerful CPUs to support emerging workloads such as agentic AI. 

That shift matters because it expands the number of semiconductor companies benefiting from AI spending instead of narrowing it. Few businesses are better positioned to capitalize on that trend than Taiwan Semiconductor Manufacturing (NYSE:TSM | TSM Price Prediction), which manufactures chips for nearly every major AI designer regardless of which technology ultimately comes out on top.

AI Growth Is Expanding Beyond GPUs Taiwan Semiconductor’s second-quarter results underscored just how central the company has become to the AI ecosystem. According to its second-quarter earnings release, revenue climbed to NT$1.27 trillion (about $40 billion), up 36% year over year, while net income surged 77%. Gross margin remained a robust 67.7%, highlighting that demand continues to outstrip supply for the company’s advanced manufacturing capacity.

Those results shouldn’t be viewed as a one-quarter success. Instead, they illustrate how AI demand continues to ripple across the semiconductor industry.

Today’s AI leaders, including Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD), Broadcom (NASDAQ:AVGO), Apple (NASDAQ:AAPL), Qualcomm (NASDAQ:QCOM), and many others, rely on Taiwan Semiconductor’s manufacturing expertise. Whether companies are building GPUs, AI accelerators, networking chips, or custom silicon, many eventually end up at TSM’s fabs.

Let’s look at what that means. Instead of betting on which chip designer will dominate AI over the next decade, investors can own the company building chips for nearly all of them.

Stop guessing which AI chip will win. All roads lead to one manufacturer currently capturing a 61% surge in profits. © 24/7 Wall St. The CPU Opportunity Is Only Getting Started The next growth engine may surprise investors. During the second-quarter conference call, CEO C.C. Wei noted that agentic AI is creating renewed demand for CPUs inside AI data centers. While GPUs remain the primary workhorses for AI training and inference, CPUs coordinate workloads, manage memory, and handle countless supporting tasks.

As Wei explained:

“The AI market continues to be very dynamic. The emergence of Agentic AI is leading to a resurgence in the role of CPUs in AI data centers… no matter what CPU approach is taken, whether it’s x86, ARM-based, or RISC-V architecture, they are almost all TSMC’s customers.”

That’s an important point investors shouldn’t overlook. The CPU market now has multiple growth paths:

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Taiwan Semiconductor Manufacturing didn't make the cut. Grab the names FREE today.

CPU Architecture Key Players Why It Matters For TSM x86 AMD, Intel (NASDAQ:INTC) AI servers continue requiring powerful host CPUs ARM Nvidia, Ampere, Apple, Amazon (NASDAQ:AMZN) Custom processors are becoming more common in AI infrastructure RISC-V Numerous startups and hyperscalers Open-source architecture is attracting growing investment In every case, Taiwan Semiconductor stands to manufacture many of those chips.

Ironically, investors don’t have to predict which CPU architecture wins. If AI demand continues expanding, TSM benefits from higher wafer volumes regardless of whether x86, ARM, or RISC-V captures the largest market share.

Key Takeaway In short, Taiwan Semiconductor offers investors something increasingly rare: a way to benefit from AI without having to predict which chip company becomes the next superstar.

Granted, risks remain. Semiconductor demand has always been cyclical, geopolitical tensions surrounding Taiwan haven’t disappeared, and AI spending could eventually slow from today’s rapid pace.

That said, the AI opportunity is becoming broader rather than narrower. Memory, CPUs, networking, and custom AI silicon are all seeing growing investment alongside GPUs. Since Taiwan Semiconductor sits at the center of nearly every one of those markets, each new AI trend creates another avenue for growth.

Ultimately, that’s the company’s greatest competitive advantage. AI may evolve in ways nobody fully expects over the next decade. Regardless of whether the future belongs to GPUs, custom accelerators, ARM processors, x86 chips, or RISC-V designs, Taiwan Semiconductor is positioned to manufacture the silicon powering them all. 

For investors looking for one company that can ride nearly every wave of the AI revolution, that’s a compelling place to start.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Taiwan Semiconductor Manufacturing didn't make the cut. Grab the names FREE today.

Contact [email protected] for any questions or corrections.

Taiwan Semiconductor Manufacturing (TSM 2.96%) may be one of the most important companies to the health of the AI infrastructure build-out. Its foundries churn out the logic chips designed by nearly every one of the major players in the space, and it just made an announcement that supports the idea that we're still in the early innings of the AI build-out. During its second-quarter earnings call, it announced it would make an additional $100 billion investment in expanding its chipmaking facilities in Arizona. If Taiwan Semiconductor suspected that the AI build-out was nearing completion, it wouldn't be increasing its production capacity.

Given its leading position in a still-growing space, I think Taiwan Semiconductor is one of the lowest-risk, highest-potential-reward options in the market, and it still looks like a phenomenal investment now, even after rising over 30% so far this year.

Image source: Taiwan Semiconductor Manufacturing Company.

AI computing power starts with Taiwan Semiconductor Taiwan Semiconductor is the world's leading third-party chip foundry, which means it takes chip designs from its clients and manufactures them on their behalf. Its customers include tech giants Nvidia, AMD, Apple, Broadcom, and Tesla. This puts TSMC in a strong position, as it often manufactures chips for rivals such as Nvidia and AMD, allowing it to profit regardless of which of those customers is winning in the marketplace. Taiwan Semiconductor accounts for nearly three-quarters of all semiconductor industry revenue in the world, according to research by The Motley Fool. During the quarter, 66% of its revenue came from high-performance computing, showcasing that AI is eating up a lot of Taiwan Semiconductor's production capacity, and explaining its plan to expand its Arizona foundries.

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Taiwan Semiconductor is one of the top ways to invest in the AI arms race, and it's honestly not as expensive as you might guess, considering its solid growth rate. (Revenue grew by 34% in U.S. dollars during Q2.) At 24 times forward earnings, Taiwan Semiconductor trades at only a small premium to the S&P 500 (^GSPC 1.01%), which averages 21.7 times forward earnings.

TSM PE Ratio (Forward) data by YCharts.

Few companies have as much guaranteed success as Taiwan Semiconductor does as long as spending on AI computing power remains robust. All signs point to that assumption remaining correct over the next few years, which gives me confidence that Taiwan Semiconductor will be a market-crushing stock over that period, making it a no-brainer buy today.

Keithen Drury has positions in Broadcom, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Broadcom, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.

Chip giant Taiwan Semiconductor Manufacturing Co. is supercharging an already massive US investment spree – pledging an additional $100 billion to meet surging AI demand.  

The move brings TSMC’s investment in the US to $265 billion and comes as the company posted second-quarter earnings that blew past market expectations Thursday.

TSMC, which supplies powerful chips that are critical for tech giants like Apple and Nvidia, boosted its global capital spending plan for 2025 to between $60 billion and $64 billion.

TSMC Chairman and Chief Executive C.C. Wei is doubling down on American investment with an additional $100 billion. AFP via Getty Images That record level marks an increase of about 7% to 14% from its previous forecast.

Still, TSMC’s US-listed shares slipped 3% after the earnings report as the market continues to be squeamish about lofty valuations and questions about return on investment for the AI industry.

The spending spree comes in response to demand from top US customers and could fund the addition of four more advanced facilities to TSMC’s existing Arizona site, according to the company’s Chair and CEO C.C. Wei.

It’s “the largest foreign direct investment in US history,” he said.

TSMC originally pledged $100 billion last year to boost production in the US as part of a four-year project announced alongside President Trump. That move came amid Trump’s threats to impose harsh tariffs on computer chips and other key products while seeking to secure better deals for the US economy.

Commerce Secretary Howard Lutnick hailed Thursday’s announcement, saying it “will create tens of thousands of American jobs and bring advanced semiconductor manufacturing back to America.” 

The record investment plans firmly place the TSMC atop the global semiconductor supply chain and provide the latest signal the AI boom isn’t slowing down anytime soon. 

The earnings win came days after chip equipment supplier ASML also upped its annual sales forecast, citing strong AI demand.

TSMC’s spending spree could fund the addition of four more advanced facilities. Bloomberg via Getty Images Earlier this year, Taiwan and the US reached a trade and investment agreement that aims to further the Trump administration’s effort to rebuild domestic manufacturing.

Expanding in the US gives TSMC a stronger presence near its biggest customers while allowing the company to keep its most advanced chipmaking technology in Taiwan.

Wei said the company’s US expansion wasn’t a short-term decision but the result of years of planning – chip fabrication plants cost tens of billions of dollars and take years to complete as companies must forecast future demand long before construction begins.

“We are using multiple levers to do everything we can, wherever we can, however we can, to maximize support to all our customers,” Wei said.

The Taiwanese chip giant now expects full-year revenue growth to come in at slightly more than 40%, raising its outlook from an earlier projection of more than 30%.

The optimism appeared to be backed up by TSMC’s latest quarterly results. Net profit surged 77% from a year earlier to 706.56 billion New Taiwan dollars, or $21.98 billion, while revenue climbed 36% as AI infrastructure spending and consumer electronics stockpiling lifted sales during what is usually a softer quarter.

Taiwan Semiconductor Manufacturing Company Limited (TSM) Q2 2026 Earnings Call July 16, 2026 2:00 AM EDT

Company Participants

Jeff Su - Director of Investor Relations
Jen-Chau Huang - Senior VP & CFO
C.C. Wei - Chairman & CEO

Conference Call Participants

Sunny Lin - UBS Investment Bank, Research Division
Charlie Chan - Morgan Stanley, Research Division
Yu Jang Lai - Macquarie Research
Gokul Hariharan - JPMorgan Chase & Co, Research Division
Jim Fontanelli - Arete Research Services LLP
Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division
Chia Yi Chen - Citigroup Inc., Research Division
Haas Liu - BofA Securities, Research Division
Robert Sanders - Deutsche Bank AG, Research Division
Evelyn Yu - Goldman Sachs Group, Inc., Research Division
Junhong Pan - KGI Securities Co. Ltd., Research Division

Presentation

Jeff Su
Director of Investor Relations

Good afternoon, everyone. And welcome to TSMC's Second Quarter 2026 Earnings Conference and Conference Call. This is Jeff Su, TSMC's Director of Investor Relations and your host for today.

Today's event is being webcast live through TSMC's website at www.tsmc.com, where you can also download the earnings release materials. [Operator Instructions]

The format for today's event will be as follows: First, TSMC's Senior Vice President and CFO, Mr. Wendell Huang, will summarize our operations in the second quarter 2026, followed by our guidance for the third quarter 2026. Afterwards, Mr. Huang and TSMC's Chairman and CEO, Dr. C.C. Wei, will jointly provide the company's key messages. Then we will open both the floor and the line for the question-and-answer session.

As usual, I'd like to remind everybody that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor notice that appears in our press release.

And now I would like to

16.7.2026 09:29, TSM

Tchajwanský výrobce čipů TSMC zveřejnil výsledky hospodaření za druhé čtvrtletí roku 2026 a zároveň představil výhled tržeb na třetí čtvrtletí, který překonal průměrný odhad analytiků. Společnost oznámila také dodatečnou investici 100 mld. USD do rozšíření výroby v americké Arizoně.

Výsledky společnosti TSMC (TSM) za 2Q 2026   2Q 2026 2Q 2025 Tržby (mld. USD) 40,20 30,07 Čistý zisk (mld. USD) 22,36 12,58 Zisk na ADR* (ADR, USD/akcie) 4,31 2,43 * Akcie TSMC se obchodují formou amerických depozitních certifikátů (ADR), jeden odpovídá pěti akciím.

Výsledky za 2Q Tržby dosáhly 1,27 bil. TWD (40,20 mld. USD), meziročně vzrostly o 36,0 % v tchajwanských dolarech, resp. o 33,7 % v USD, a byly v souladu s odhadem 1,27 bil. TWD.

Hrubá marže dosáhla 67,7 %, nad odhadem 67,1 %.

Provozní zisk činil 766,6 mld. TWD (24,26 mld. USD), nad odhadem 742,75 mld. TWD. Provozní marže dosáhla 60,3 %, nad odhadem 58,6 %.

Čistý zisk dosáhl 706,6 mld. TWD (22,36 mld. USD), meziročně vzrostl o 77,4 % a překonal odhad 623,73 mld. TWD. Čistá zisková marže činila 55,6 %.

Ředěný zisk na akcii dosáhl 27,25 TWD (4,31 USD na ADR), meziročně vzrostl o 77,4 %.

V mezikvartálním srovnání tržby vzrostly o 12,0 % a čistý zisk o 23,4 %.

Tržby podle technologie

Tržby společnosti dle jednotlivých technologií, zdroj: TSMC

Tržby podle platformy

Tržby společnosti dle jednotlivých platforem, zdroj: TSMC

Výhled na 3Q 2026 Společnost pro třetí čtvrtletí roku 2026 očekává:

Tržby 44,6–45,8 mld. USD (konsensus: 43,11 mld. USD). Hrubou marži 65–67 % (konsensus: 65,9 %). Provozní marži 56–58 % (konsensus: 57,7 %). Komentář vedení Wendell Huang, finanční ředitel TSMC, uvedl: „Náš byznys ve druhém čtvrtletí byl podpořen silnou poptávkou po našich špičkových procesních technologiích. Do třetího čtvrtletí 2026 očekáváme, že náš byznys bude nadále podporován silnou poptávkou po špičkových procesních technologiích, včetně prudkého náběhu naší 2nanometrové technologie.“

Generální ředitel C.C. Wei zároveň oznámil, že společnost nyní očekává celoroční růst tržeb za rok 2026 mírně nad 40 % meziročně v dolarovém vyjádření. Huang dodal, že TSMC zvýší kapitálové výdaje pro rok 2026 na 60–64 mld. USD, jelikož společnost nadále výrazně investuje na podporu růstu svých zákazníků.

Dodatečné informace TSMC oznámil, že do svého závodu v americké Arizoně investuje dalších 100 mld. USD na výstavbu „čtyř nebo více“ továren, čímž se celkový objem investičních plánů společnosti ve Spojených státech zvýší na 265 mld. USD. Podle Weie má jít o výstavbu několika a více závodů na výrobu logických polovodičových waferů pro technologie 2 nm a novější, stejně jako závodů pro pokročilé pouzdření.

Akcie TSMC Akcie TSMC (TSM) včera v poburzovní fázi obchodování vzrostly o 0,84 % na 423,00 USD.

Taiwan Semiconductor Manufacturing Co Ltd (TSM) před výsledky uzavřely na 419,48 USD Ukazatel   Ukazatel   Kapitalizace (mld. USD) 2175,6 P/E 28,6 Vývoj za letošní rok (%) +38,0 Očekávané P/E 27,0 52týdenní minimum (USD) 223,7 Prům. cílová cena (USD) 486,8 52týdenní maximum (USD) 479,0 Dividendový výnos (%) 0,8 Zdroj: TSMC, Bloomberg

Michal Šnobl, Fio banka, a.s.

Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM) is expected to report second quarter results that come in slightly ahead of expectations, with Wedbush analysts pointing to strong revenue trends and continued demand for advanced semiconductor technologies as potential drivers for a stronger outlook.

Wedbush reiterated its ‘Outperform’ rating ahead of TSMC’s earnings, writing that the company’s monthly revenue figures indicate it likely exceeded the firm’s prior second-quarter top-line estimate by around 1%, similar to the previous quarter’s performance.

The analysts expect gross margins to have at least reached the midpoint of TSMC’s prior guidance range, noting that results appeared to track closely with expectations throughout the quarter.

Looking ahead, Wedbush expects TSMC could provide an improved revenue outlook for the full year. The company previously guided for sales growth of more than 30% in US dollar terms, while revenue growth has been tracking in the high-30% range year-to-date. Wedbush wrote that the ramp of TSMC’s 2-nanometer process technology in the second half of 2026 could support at least mid-30% annual sales growth.

The analysts added that such an outcome could lead to higher 2026 estimates and reduce the magnitude of the slowdown they currently model for 2027.

Wedbush also highlighted gross margins as a key area to monitor, with the firm and consensus forecasts currently expecting some pressure in the second half of the year due to the 2nm launch and expanded overseas manufacturing capacity. The analysts wrote that third-quarter guidance should provide more visibility into how those factors will affect profitability, while recent currency movements could provide some benefit.

Capital spending will also be closely watched, with Wedbush writing that sustained demand for advanced nodes could prompt TSMC to raise its annual capex outlook again. The analysts noted that this would further support the view that current 2027 revenue growth expectations may be too conservative.

Wedbush wrote that TSMC remains one of its preferred hardware investments, citing the company’s position in advanced semiconductor manufacturing and packaging as a key beneficiary of the ongoing AI data center build-out and future edge AI opportunities across areas including optics, robotics, automotive technology and electronic design automation.

Shares of TSMC traded hands at $417 on Wednesday afternoon, having gained more than 37% so far this year.

As the second-quarter earnings season heats up, investors are looking for companies that combine durable long-term growth drivers with strong underlying fundamentals.

While quarterly reports can create short-term volatility, they also provide opportunities to build positions in high-quality businesses that have the potential to outperform over time.

Three stocks that stand out ahead of their upcoming Q2 reports on Thursday, July 16 are GE Aerospace (GE - Free Report) ), Taiwan Semiconductor (TSM - Free Report) ), and UnitedHealth Group (UNH - Free Report) ).

Each operates in an industry with attractive long-term demand trends, boasts market-leading positions, and has catalysts that could support further upside if quarterly results reinforce their investment theses.

GE Aerospace Continues to Benefit From Aviation RecoveryGE Aerospace has emerged as one of the market's premier industrial companies following its transformation into a pure-play aerospace business. The company continues to benefit from robust commercial air travel demand following the COVID-19 pandemic, rising aircraft utilization, and a growing backlog of engine service work.

Perhaps GE's greatest strength is its highly profitable aftermarket business. As airlines keep aircraft flying longer amid ongoing delivery constraints from Boeing (BA - Free Report) ) and Airbus (EADSY - Free Report) ), demand for maintenance, repair, and overhaul services continues to rise. Since servicing engines typically generates higher margins than selling new ones, this dynamic has helped drive steady earnings expansion.

Analysts expect another quarter of solid revenue and earnings growth as commercial aviation remains healthy despite lingering supply-chain challenges. GE’s Q2 revenue is expected to be up nearly 17% to $11.86 billion, with quarterly EPS projected to rise 12% to $1.86.

Taiwan Semiconductor Remains at the Center of the AI BoomFew companies are more important to the artificial intelligence investment story than Taiwan Semiconductor. As the world's largest contract chip manufacturer, TSM produces the advanced semiconductors powering AI accelerators designed by Nvidia (NVDA - Free Report) ), AMD (AMD - Free Report) ), Broadcom (AVGO - Free Report) ), and Apple (AAPL - Free Report) ). 

Demand for advanced manufacturing capacity continues to outpace supply, allowing Taiwan Semiconductor to benefit from favorable pricing, exceptional capacity utilization, and expanding profit margins.

Adding confidence ahead of earnings, the company most recently reported record quarterly revenue and EPS during Q1 at $35.89 billion and $3.49 per share, respectively.

Wall Street expects new quarterly peaks, with consensus estimates calling for Q2 EPS of $3.87 on nearly $40 billion in revenue, reflecting continued AI-driven demand. Those expectations reflect nearly 57% EPS growth and 32% sales growth.

UnitedHealth is Staging an Impressive TurnaroundTrading near its 52-week high, UnitedHealth Group’s stock has been on an impressive rebound after facing increased regulatory scrutiny, higher-than-expected Medicare Advantage utilization, and uncertainty surrounding reimbursement trends.

With those headwinds starting to subside, investors are starting to re-recognize the company's industry-leading scale. Although Q2 sales are expected to dip 1% to $110.05 billion, quarterly EPS is expected to be up 18% to $4.84, reflecting the health giant’s more promising execution.

Of course, what has also kept investors engaged is that UNH offers a very respectable 2.16% annual dividend yield that equates to $9.28 per share quarterly.

Bottom LineQuarterly earnings often create volatility, but they can also present opportunities to accumulate shares of industry leaders with durable competitive advantages.

GE Aerospace and Taiwan Semiconductor are currently sporting a Zacks Rank #2 (Buy), with UnitedHealth Group stock boasting a Zacks Rank #1 (Strong Buy). Investors looking to strengthen their portfolios as the Q2 earnings season heats up may find these three blue-chip companies worthy of closer consideration.

SummaryCompaniesNet profit forecast to jump 59% to $20 billion in second quarterEarnings call scheduled for Thursday at 0600 GMTTSMC benefiting more than other chip foundries from AI boomSecond-quarter revenue rose 36% to new record, TSMC ​said MondayTAIPEI, July 14 (Reuters) - TSMC, the world's largest manufacturer of advanced ‌AI chips, will likely notch a fifth consecutive quarter of record earnings, driven by booming AI infrastructure spending.

Analysts say demand for Taiwan Semiconductor Manufacturing Co's (TSMC) (2330.TW), opens new tab 3-nanometre and 2-nanometre process technologies for AI chips, as well as for its advanced chip packaging technology, ​CoWoS, remains strong.

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That has catapulted Asia's most valuable company, a key supplier to Nvidia (NVDA.O), opens new tab and Apple (AAPL.O), opens new tab, to ​new heights. Its market capitalisation is now nearly double that of South Korean rival ⁠Samsung Electronics (005930.KS), opens new tab at around $1.97 trillion.

On Thursday, TSMC is expected to report a 59% surge in net profit to ​T$632.6 billion ($19.65 billion) for the second quarter, according to an LSEG SmartEstimate compiled from 18 analysts. SmartEstimates place greater weight ​on forecasts from analysts who are more consistently accurate.

An earnings call at which it will provide third-quarter and updated full-year guidance is scheduled for 0600 GMT.

Any result above T$572.5 billion would mark the company's highest-ever quarterly net income, and its 10th consecutive quarter of ​profit growth.

On Monday, it posted a 36% year-on-year rise in second-quarter revenue, ahead of market forecasts and a ​new record high.

"TSMC’s strong second-quarter revenue shows AI demand remains healthy, driving demand for its advanced chip production and CoWoS ‌packaging," said ⁠Dan Nystedt, research analyst at TriOrient, an Asia-based private investment firm.

People stand behind a sign with a TSMC logo during TSMC's third quarter earnings conference in Taipei October 25, 2012. Taiwan Semiconductor Manufacturing Co Ltd (TSMC) forecast two quarters... Purchase Licensing Rights, opens new tab Read more

Analysts broadly expect TSMC to raise its full-year revenue growth outlook.

Haas Liu, Bank of America's Asia semiconductor analyst, said in a research note that supply chain checks suggest the AI demand pipeline remains strong, and that TSMC could raise the full-year outlook from ​its current guidance of "above 30%" ​year-on-year.

Another key focus for ⁠investors will be whether TSMC raises its capital spending outlook, viewed as an important gauge of management's confidence in the durability of AI demand.

On its last earnings ​call in April, the company said 2026 capital expenditure would be at the high ​end of ⁠its earlier guidance of $52 billion to $56 billion.

While some analysts, including Nystedt, expect TSMC to retain that guidance, Liu forecasts the company could raise capital spending to about $58 billion, citing tight equipment supply and aggressive capacity expansion by ⁠memory makers ​including Samsung Electronics (005930.KS), opens new tab, Micron Technology (MU.O), opens new tab and SK Hynix (000660.KS), opens new tab.

TSMC is investing $165 billion ​to build chip factories in the U.S. state of Arizona.

TSMC's Taipei-listed shares have gained 56% so far this year, slightly higher than the 54% ​rise for the broader market (.TWII), opens new tab.

($1 = 32.1880 Taiwan dollars)

Reporting by Wen-Yee Lee and Ben Blanchard; Editing by Kevin Buckland

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Ben joined Reuters as a company news reporter in Shanghai in 2003 before moving to Beijing in 2005 to cover Chinese politics and diplomacy. In 2019 Ben was appointed the Taiwan bureau chief covering everything from elections and entertainment to semiconductors.

In the third quarter of 2025, Goldman Sachs analysts were trying to estimate just how much the technology hyperscalers (Alphabet, Meta, Amazon, Microsoft, and others) would spend in 2026 to build out data centers.

Their estimate at the time: $465 billion.

That was supposed to account for all the monumental spending on artificial intelligence(AI) infrastructure. But even after they revised their estimate to $527 billion just three months later, they still missed the mark.

Hyperscalers now are forecast to devote about $750 billion to capital expenditures (capex) this year -- and the number could go higher next year.

That's fantastic news for Micron Technology (MU 1.05%) and Taiwan Semiconductor Manufacturing (TSM 0.55%), also called TSMC. These two companies are leading pick-and-shovel investments in the enormous AI data center build-out that's currently underway, and they could benefit for years to come. Here's why.

Image source: Getty Images.

Hyperscalers can't get enough of Micron Technology's memory So called pick-and-shovel companies benefit from selling the tools that help other companies build what they need. In the current AI gold rush, Micron is a great pick-and-shovel play because it sells much-needed memory chips to tech companies.

With AI data center spending surging, hyperscalers are buying up as many memory processors as they can get. Artificial intelligence uses a lot of it, and that's driving memory prices higher and leading to much higher profits for Micron.

Consider that in the third quarter of fiscal 2026 (ended May 28), Micron's sales jumped 345% to $41.5 billion, and adjusted earnings per share spiked more than 1,300% to $24.67. The company's management believes this growth isn't anywhere near finished yet. Just read what Micron Chief Executive Officer Sanjay Mehrotra said on the Q3 earnings call: "The memory industry has been structurally transformed by the proliferation of AI. We are only in the early innings of the significant innovation and productivity that can be unleashed in every part of the global economy over time."

And the company likely isn't exaggerating the shift toward long-term memory demand. Alphabet's capex spending will reach as much as $190 billion this year, and management said that next year's spending is likely to "significantly increase." In short, AI spending is still accelerating.

That's one of the reasons three analysts recently raised their price target for Micron stock to $1,500, representing a 51% increase from its current price.

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Taiwan Semiconductor could be the ultimate pick-and-shovel AI play As the world's leading semiconductor manufacturer, TSMC is arguably one of the best ways for investors to play long-term demand in AI data center infrastructure. The company makes an estimated 70% of the world's processors and 90% of the most advanced processors (including those for AI).

This means that no matter which company leads the AI gold rush, TSMC benefits. If Nvidia loses ground to a competitor, Taiwan Semiconductor still wins. If Alphabet outpaces OpenAI and Anthropic to take the crown for the top AI model, TSMC still wins as long as they all need lots of processors.

And they all need lots of processors.

TSMC's revenue jumped about 41% in the first quarter to nearly $36 billion, and adjusted earnings (not in accordance with generally accepted accounting principles, or GAAP) popped 58% to $3.49 per American depositary receipt (ADR). It's worth mentioning that TSMC's gross margin is very impressive, too, reaching 66% in the quarter and helping the company's bottom-line growth as processor demand heats up.

And more growth is likely on the way. Taiwan Semiconductor Chief Executive Officer C.C. Wei said on the first-quarter earnings call: "The shift from generative AI and the query mode to agentic AI and the command and action mode is leading to another step up in the amount of tokens being consumed. This is driving the need for more and more computation, which supports the robust demand for leading-edge silicon."

For investors looking to tap into the AI data center boom and benefit regardless of which hyperscaler leads the pack, Micron Technology and Taiwan Semiconductor are two fantastic choices right now.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Goldman Sachs Group, Meta Platforms, Micron Technology, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Taiwan Semiconductor (TSM 0.55%), the world's largest contract chipmaker, builds the most advanced processors on the planet for nearly everyone that matters, including Nvidia, Advanced Micro Devices, and Apple. So when it reports second-quarter results this week, its numbers will say as much about those customers as about TSMC itself.

Here's what I'll be watching, and why each figure matters well beyond Taiwan.

Image source: Getty Images.

Why one company's report moves the whole complex Because TSMC manufactures the chips its customers design, its revenue is a direct measure of how many high-end processors are actually getting built, not just ordered. If Nvidia's accelerators and AMD's chips are flying out the door, it tends to show up in TSMC's factories first.

The setup is strong. In the first quarter of 2026, TSMC's revenue rose about 41% year over year to $35.9 billion, and its gross margin reached an impressive 66.2%.

Management then guided for second-quarter revenue of $39 billion to $40.2 billion, which would be roughly 32% growth from a year earlier. It has also said it expects full-year 2026 revenue to grow more than 30% in dollar terms, driven by AI and high-performance computing.

So TSMC heads into this report with real momentum. Is the AI build-out still accelerating, or is it finally starting to cool?

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3 numbers to watch on July 16 First, revenue and the next forecast. Watch whether second-quarter revenue lands at the high end of guidance, and pay even closer attention to the outlook for the third quarter. A strong forecast would signal that AI-chip demand is holding up into the second half of the year. A cautious one could be the first real crack. TSMC's forecasts have been reliable, so its own view of the next quarter carries real weight.

Second, gross margin. A 66% margin is remarkable for a company that runs factories, and it reflects genuine pricing power. But TSMC is ramping its cutting-edge 2-nanometer process, and brand-new manufacturing nodes are expensive early on. If margins hold near current levels, it tells you TSMC can manage early node costs without much margin pressure. Apple is reportedly expected to have its next iPHone chips built on that 2-nanometer process.

Third, the 2026 capital-spending plan. This may be the most important number of all. TSMC spent about $11 billion on capital expenditures in the first quarter alone, and its full-year plan is the industry's clearest signal of how much AI capacity is on the way.

That budget now runs into the tens of billions of dollars a year, rivaling the biggest spenders in all of tech. If management raises the outlook again, it is effectively betting that demand keeps climbing for years to come. If it holds the line, that caution would ripple across every AI chip stock.

Put it together, and TSMC's report is really a status check on the entire AI trade. Nvidia and AMD can't sell chips TSMC doesn't build, and Apple's next iPhone reportedly leans on TSMC's newest process. So, in a very real sense, TSMC's factories are the bottleneck for the whole AI hardware supply chain.

Strong numbers and a confident spending plan would reassure investors that the boom has room to run. Weak ones would land on the whole group at once.

So how should investors approach the stock heading into the report? Carefully. I wouldn't buy or sell TSMC on a two-day move around an earnings report, and predicting which way a single quarter breaks is a losing game.

But there's a bigger picture worth keeping in mind. At about $437 as of this writing, roughly 22 times expected earnings over the next 12 months, TSMC isn't valued nearly as aggressively as some of the AI names that depend on it. And it even pays a modest dividend, a rarity among AI-exposed chip stocks.

For long-term investors, TSMC looks like one of the more reasonable ways to own the AI build-out. July 16 is simply a chance to check whether the thesis is still on track, and I'll be watching the capital-spending line first.

Taiwan Semiconductor Manufacturing Co. reported a 67.9% year-on-year rise in its June sales on Monday, ahead of its second-quarter earnings release later this week.

For the first half of 2026, TSMC's total revenue reached 2.4 trillion new Taiwan dollars ($74.99 billion), representing a 35.6% increase compared to the same period in 2025. TSMC reported June revenue of NT$ 442.68 billion — a 6.2% increase from the previous month.

The Taiwanese chip giant's shares were trading 1% higher Monday.

The company' growth has been boosted by demand for artificial intelligence chips and infrastructure investments. 

The world's largest contract chipmaker manufactures semiconductors for a wide range of applications, spanning from smartphones to high-performance AI computing systems, with key clients including U.S. technology leaders such as AI darling Nvidia, Apple and Advanced Micro Devices.

TSMC plans to add two advanced chip packaging plants in the Chiayi Science Park in southern Taiwan, Reuters reported, citing remarks made by Taiwan's National Science and Technology Council Minister Wu Cheng-wen on Sunday. Wu noted that the site's first facility is already in mass production, with the second expected to begin shortly. 

TSMC, which commands a 73% share of the global pure-foundry market — chips manufactured for clients — in the first quarter of 2026, according to data from Counterpoint Research, is set to report its second-quarter earnings on Thursday, July 16. 

Throughout the massive growth of artificial intelligence and the infrastructure that powers it, Taiwan Semiconductor Manufacturing (TSM 0.04%) has been a consistent winner. TSMC, as it’s known, is the world’s largest chip foundry, producing advanced semiconductors for Nvidia, Advanced Micro Devices, Broadcom, and many others.

TSMC holds a dominant 73% market share in the global foundry market, with second-place Samsung at only 7%. But a Japanese company, Rapidus, is taking aim at TSMC, with plans to mass-produce advanced 2 nm chips while undercutting TSMC on price.

TSMC started producing 2 nm chips this year, and they’re reportedly priced at $30,000 per wafer. Rapidus, which is reportedly in talks with more than 60 companies, would reportedly price its 2 nm process at about $21,000 per wafer, but the company doesn’t plan to enter production until 2027.

Can Rapidus really pose a threat to TSMC’s dominance? I don’t think so, and here’s why.

Image source: The Motley Fool.

TSMC's track record can’t be touchedIt’s hard to overstate the impact that TSMC has had on the industry. Nvidia CEO Jensen Huang has repeatedly praised the company -- in a 2025 news conference, he was nearly gushing: "They are a world-class foundry and support customers of diverse needs. You can't overstate the magic that is TSMC," he said. And during a visit to Taiwan, he called TSMC “one of the greatest companies in the history of humanity.”

One reason for TSMC’s dominance is its open innovation platform, which the company uses to collaborate with customers in their chip designs. TSMC says that through its platform, the company has been involved with 85% of global start-up semiconductor prototypes. In all, TSMC produced more than 12,600 different products in 2025 using 305 separate process technologies.

TSMC also excels at making chips with more advanced process nodes, meaning that designers can pack more of them on individual chips to make them more powerful. In the first quarter, 25% of TSMC’s revenue came from building 3 nm chips and 36% came from building 5 nm chips. That’s a big change from 2023, when only 6% of TSMC’s revenue came from 3 nm chips and 33% came from 5 nm chips. It hasn’t yet reported 2 nm sales, but those will likely be discussed when TSMC files its second-quarter earnings on July 16.

TSMC’s revenue in the first quarter was $35.9 billion, up 40.6% from a year ago. And it forecasts revenue between $39 billion and $40.2 billion, with an operating profit margin between 56.5% and 58.5%.

The challenges facing RapidusLaunched in 2022 with the backing of the Japanese government, Rapidus will be hard-pressed to break through TSMC’s dominance. Not even established chipmakers like Samsung or Intel have been able to gain meaningful market share.

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Rapidus has only a pilot line in operation and plans to open a second fab next year as it ramps up. But it still needs to prove it can manufacture at scale while making a reasonable profit. Management already seems to be hedging on the possible price, stating in a news release that “semiconductor prices vary significantly depending on the specifications of the products ordered by semiconductor design companies and are subject to fluctuations due to factors such as exchange rates.”

So, even if Rapidus can match or just slightly undercut TSMC prices, would major companies have an incentive to switch suppliers? It’s unlikely.

Top semiconductor companies don’t choose their manufacturing partners based on price alone. TSMC has proven itself a reliable partner that delivers high-quality work at scale -- work that has helped Nvidia, Broadcom, AMD, and other chip companies soar to new heights. TSMC will have more than a year of mass-producing 2 nm chips before Rapidus can even get started.

Even with the backing of the Japanese government, it’s highly unlikely that Rapidus will pose a threat to TSMC, and investors shouldn’t be concerned about its undercutting strategy.

INDIA - 2023/12/14: In this photo illustration, the Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) logo seen displayed on a mobile phone screen with the AI (artificial intelligence) revolution symbol in the background. (Photo Illustration by Idrees Abbas/SOPA Images/LightRocket via Getty Images)

SOPA Images/LightRocket via Getty Images

Taiwan Semiconductor Manufacturing Company (NYSE: TSM) reports second-quarter earnings on Thursday, July 16, with its earnings conference scheduled for 2:00 p.m. Taipei time (2:00 a.m. ET). The numbers Wall Street is penciling in tell their own story about how far this AI cycle has already run. Consensus estimates call for revenue near $40 billion, up roughly 32% year-over-year, with earnings per ADR unit expected to rise more than 50% from a year ago. TSMC itself guided to revenue between $39.0 billion and $40.2 billion, with gross margin in a 65.5% to 67.5% range.

What makes this print more interesting than a routine beat-and-raise is not the top line. TSMC has cleared elevated bars all year, leading many to name it among the best AI infrastructure plays for 2026. The real question is what management says about the back half of the year, and whether the company is finally catching up to the tsunami of demand it has been chasing for two years.

What The Market Wants to HearInvestors will be listening for three things on the call.

First, whether TSMC lifts its full-year revenue growth guidance, which currently stands at "above 30%" in dollar terms. Citi and other sell-side shops expect an upward revision given management's April commentary about "extremely robust" AI demand. Second, whether the company raises its 2026 capital budget above the high end of its existing $52 billion to $56 billion range, which would signal even more urgency to add capacity. Third, and most closely watched, is an update on advanced packaging — specifically CoWoS. This technology binds logic chips to high-bandwidth memory and has become the true chokepoint in AI chip production.

There is a modest note of caution heading into the print. TSMC's combined April and May revenue grew about 24% year-over-year, short of the roughly 35% growth some investors had penciled in for the quarter, which has introduced some near-term jitters even as the longer-term growth story remains intact.

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At the Center of AI Infrastructure BuildoutIt is difficult to overstate how central TSMC has become to the infrastructure race now underway among the major cloud platforms. Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL) and Meta Platforms (NASDAQ: META) are together on pace to spend about $700 billion on capital expenditure this year, up roughly three-quarters from 2025.

The bulk of that money is flowing into AI data centers, custom silicon and the GPUs that TSMC alone has the capacity to manufacture at scale. Nearly every leading AI accelerator — Nvidia's (NASDAQ: NVDA) GPUs, AMD's (NASDAQ: AMD) MI-series chips, and the custom ASICs designed in-house by Google and Amazon — is fabricated on TSMC's advanced nodes and finished in TSMC's packaging lines. That concentration is precisely why TSMC's order book is a telltale gauge of AI infrastructure demand more broadly, arguably more informative than any single hyperscaler's earnings call.

The Bottleneck Has Moved from Silicon to PackagingFor most of the last two decades, the constraint in this industry was the ability to shrink transistors. That is no longer true. TSMC's 3-nanometer and 2-nanometer processes are running at high yields. The harder problem now is CoWoS advanced packaging, which stacks logic dies with high-bandwidth memory into the modules that actually ship inside an AI server. Nvidia alone has reportedly secured roughly 60% of TSMC's CoWoS output for 2026, leaving other GPU and ASIC makers to scrap for what remains. Some customers have reportedly turned to Samsung Electronics (KRX: 005930) to supplement capacity TSMC cannot provide.

TSMC has responded with one of the more aggressive capacity buildouts in its history, targeting a compound annual growth rate above 80% for CoWoS capacity between 2022 and 2027, adding packaging campuses in Tainan and Chiayi, and planning a packaging hub in Arizona to serve U.S. customers directly. Industry trackers estimate the gap between packaging supply and demand, which ran as wide as 20% earlier this year, could narrow to roughly 10% by the end of 2026 as this new capacity comes online. This means that packaging, not wafer starts, is likely to remain the variable that determines how quickly new AI hardware actually reaches customers through the rest of this year.

The Great Semiconductor Onshoring ExperimentThe risks here are less about demand, which by every account remains extraordinary, and more about execution. TSMC's own disclosures flag U.S. export controls, evolving tariff policy, and customer concentration as ongoing risks to monitor.

The Arizona expansion, now framed as a $465 billion, eleven-fab program tied to a U.S.-Taiwan tariff framework, has become the highest-profile test case for reshoring chip manufacturing in America at scale. Taiwan's National Development Council has pointed to challenges including water availability in the Arizona desert, visa delays for the Taiwanese engineers rotating through on assignment, and long-term power supply as the practical constraints management is managing in real time. None of these are new problems for U.S. semiconductor manufacturing, but the scale of what TSMC is attempting in Arizona means any one of them could push a fab timeline by quarters or even years.

Consumer Device InflationThe other thread worth watching is pricing.

TSMC has told major customers, including Apple (NASDAQ: AAPL), Nvidia and Qualcomm (NASDAQ: QCOM), to expect a fourth consecutive year of price increases starting in 2026, with hikes reportedly running 3% to 10% depending on the node and application, and now extending beyond 2-nanometer and 3-nanometer wafers to nodes as mature as 7-nanometer. A 2-nanometer wafer now runs upward of $30,000, more than 50% above the cost of a 3-nanometer wafer, and TSMC has guided to gross margin dilution of 2 to 3 percentage points this year from the 2-nanometer ramp and overseas expansion, even as pricing offsets much of that pressure.

For now, TSMC's biggest AI customers appear able to absorb these increases. Nvidia's margins remain wide enough to pass costs through, and demand for accelerators has shown little price sensitivity.

But further downstream, the picture is different. Smartphone and PC chipmakers operating on thinner margins are expected to pass a meaningful share of these increases on to consumers, which is one reason, along with surging prices for memory, analysts expect flagship device prices to tick higher starting later this year. It is a useful reminder that the AI capital cycle, for all its abstraction on a spreadsheet, is already showing up in the price of an iPhone or a laptop.

Managing High-Quality ProblemsWherever Q2 results land, TSMC is for the moment sitting in the catbird seat during the biggest capex cycle of this century.

They operate at the technological frontier of semiconductor fabrication worldwide. They work with the most desirable customers, and those customers fight to get allocations of their capacity. More significantly, they have built a “trust moat” based on years of meeting commitments, engineering excellence, and protecting customer IP that sets them apart from their closest competitors, Samsung Foundry and Intel.

The challenges TSMC faces reflect the ordinary friction of building enormous capacity and talent at record speed, and they are better positioned than anyone to manage them.

Their CEO C.C. Wei has burnished his credibility through a combination of bullish capital commitments to expansion, made after months of channel checks with major customers, and frank discussions about the risk of industry overcapacity. For this reason, analysts will be hanging on his every word to divine how long the AI Supercycle is likely to persist.

Key Takeaways Taiwan Semiconductor posted a 66.2% Q1 gross margin, beating the high end of guidance by 120 bps.TSM expects Q2 gross margin of 66.5% at midpoint, helped by utilization and cost improvements.Taiwan Semiconductor expects N3 gross margin to reach the corporate average in the second half. Taiwan Semiconductor Manufacturing Company (TSM - Free Report) reported a first-quarter 2026 gross margin of 66.2%, up 390 basis points (bps) sequentially. The improvement was driven by cost reduction efforts, a higher overall capacity utilization rate and a more favorable foreign exchange rate. Gross margin also exceeded the high end of management’s guidance by 120 bps. For the second quarter, TSM expects gross margin to increase by 30 bps to 66.5% at the midpoint, benefiting from higher utilization and ongoing cost improvement efforts, but partially offset by dilution from its overseas fabs.

Beyond the second quarter, the company expects several factors to influence profitability during the back half of 2026. The initial ramp-up of its 2-nanometer technology is projected to dilute full-year gross margin by 2% to 3%. The expanding overseas manufacturing capacity is expected to create gross margin dilution of 2% to 3% in the early stages, increasing to 3% to 4% as those facilities scale over the coming years.

Taiwan Semiconductor also indicated that recent developments in the Middle East could raise prices for certain chemicals and gases, although it is too early to estimate the potential financial impact. The company aims to generate more wafer output through enhanced manufacturing productivity and drive greater cross-node capacity optimization in its fab operations to support profitability. TSM expects N3 gross margin to cross over to the corporate average in the second half of the year. Foreign exchange movements remain another factor that could influence profitability.

TSM’s Peer UpdatesAdvanced Micro Devices (AMD - Free Report) announced plans to invest up to £2 billion over the next five years in the United Kingdom to accelerate AI innovation and research, and expand access to the compute resources needed for long-term economic growth and scientific leadership across the country. Building on its recently announced work with Oxford Quantum Circuits (OQC) and JPMorganChase, AMD also announced a collaboration with Imperial College London to advance computational science and support research that relies on large-scale computing resources, including healthcare innovation and climate modeling.

ON Semiconductor (ON - Free Report) , now branded as onsemi, entered into a definitive agreement to acquire Synaptics in an all-stock transaction, representing a total enterprise value of approximately $7 billion. By adding Synaptics’ differentiated Edge AI compute franchise and strong portfolio of human-machine interface and wireless connectivity solutions, onsemi is expected to extend its capabilities beyond power and sensing to intelligent systems. The combined platform is intended to position onsemi at the center of Physical AI, with the potential to expand onsemi’s TAM by $30 billion to $243 billion by 2030.

TSM’s Price Performance, Valuation and EarningsOver the past 12 months, Taiwan Semiconductor shares have surged 89.1%, in line with the Zacks Semiconductor - Circuit Foundry industry.

Image Source: Zacks Investment Research

In terms of valuation, TSM trades at a forward, five-year Price/Sales (P/S) of 12.25X compared with its 8.12X median and the industry average of 12.25X.

Image Source: Zacks Investment Research

Take a look at how estimates for Taiwan Semiconductor’s 2026 and 2027 earnings are shaping up.

Image Source: Zacks Investment Research

Taiwan Semiconductor currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

There are four companies in the world worth $3 trillion or more: Apple, Microsoft, Nvidia, and Alphabet. What they have in common is that they either develop the most important consumer hardware on Earth, run the software infrastructure that enterprises depend on, or design the chips that power the AI revolution.

The fifth member of that club is none of those things. Instead, it produces key components for all of them. Taiwan Semiconductor Manufacturing (TSM 2.15%) sits at roughly $2.24 trillion in market value as of late June 2026. That makes it the sixth most valuable company on the planet.

Given the numbers it's putting up right now, the $3 trillion mark is not far away. Here's how it gets there.

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The numbers make the case In 2026's first quarter, TSMC reported revenue of $35.9 billion, up 40.6% from the same quarter a year earlier. Net income rose 58.3% year over year. Gross margin came in at 66.2%. Net profit margin was 50.5%. Take a second with that last number. For every dollar TSMC brings in, it keeps fifty cents as profit. That's a level of operational leverage most companies would consider impossible.

For Q2 2026, management guided for revenue between $39 billion and $40.2 billion. The full-year 2026 growth forecast is above 30% in U.S. dollar terms. At that trajectory, TSMC will generate well north of $150 billion in annual revenue this year. If margins hold even close to where they are, the profit picture is extraordinary.

To get from $2.24 trillion to $3 trillion, the stock needs to gain roughly 34%. With earnings compounding at 50% or more year over year, that gap closes quickly.

Why TSMC is the real AI story Everyone focuses on Nvidia when they talk about AI chips, and that's fair. But Nvidia does not manufacture its own chips. Neither does Advanced Micro Devices. Neither does Apple. Every advanced processor in those companies' lineups comes out of a TSMC fab. TSMC has roughly 70% global market share in advanced chip manufacturing, and no competitor is close to challenging that at the most cutting-edge nodes.

Advanced technologies at 7 nanometers (nms) and below now account for 74% of TSMC's wafer revenue. That mix has shifted fast, and it matters because leading-edge nodes carry higher prices and better margins. As AI drives demand for 3nm and eventually 2nm chips, TSMC gets paid more per wafer and keeps more of it.

The AI infrastructure build-out is not a quarter or two of demand. Every hyperscaler is building massive graphics processing unit (GPU) clusters, and every GPU in those clusters is a TSMC chip. Nvidia has Blackwell. Amazon has Trainium. Alphabet's Google has tensor processing units (TPUs). They all flow through TSMC's fabs.

Image source: Getty Images.

Arizona changes the story For years, the argument against owning TSMC was the geopolitical risk. All the important fabs were on Taiwan, and the uncertainty around that geography created what analysts called a "Taiwan discount" on the stock's valuation. That discount is starting to shrink.

TSMC has committed $165 billion to its Arizona expansion, a campus covering more than 2,000 acres with six planned fabs, two advanced packaging facilities, and an R&D center. The first Arizona fab already turned a $514 million profit in its first year of production. Phase two, running at 3nm, is on track for 2027, a full year ahead of the original schedule.

As more production moves to U.S. soil, institutional investors who previously avoided TSM on geopolitical grounds have a reason to buy. That is not a small shift. More buyers chasing the same fundamental story pushes multiples up, which pushes market cap up alongside the earnings growth.

TSMC is not invincible. A serious escalation in Taiwan tensions remains a risk that no analyst can fully price. The company also relies on equipment makers like ASML Holding for the tools it needs to manufacture at leading-edge nodes, which creates supply-chain dependencies. And semiconductor cycles can turn. A broad slowdown in AI infrastructure spending would show up in TSMC's numbers fast.

But if you believe AI is a decade-long build-out, and that someone has to manufacture all those chips, TSMC's path to the $3 trillion club is one of the more visible roads in the market right now.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Key Takeaways Taiwan Semiconductor is expanding global N3 capacity to meet strong AI and advanced chip demand.TSM plans new 3-nanometer volume production in Taiwan and Arizona in 2027, and Japan in 2028.TSM expects N3 gross margin to exceed the corporate average in the second half of 2026. Taiwan Semiconductor Manufacturing Company (TSM - Free Report) is accelerating capital spending to expand global capacity for 3-nanometer FinFET (N3) technologies in response to strong demand for artificial intelligence (AI) applications. The move is expected to support the robust multiyear pipeline of demand for these technologies, which are used by smartphone, High-Performance Computing AI, including High Bandwidth Memory-based dies, automotive and Internet of Things customers. The investment marks a departure from the company’s long-standing practice of limiting capacity additions to a node once it has reached its target capacity.

In Taiwan, TSM is adding a new 3-nanometer fab to its GIGAFAB cluster in Tainan Science Park, with volume production scheduled for the first half of 2027. In Arizona, Taiwan Semiconductor’s second fab will also utilize 3-nanometer technologies. With construction already completed, volume production is set to begin in the second half of 2027. Meanwhile, in Japan, the company plans to utilize 3-nanometer technology in its second fab, with volume production scheduled for 2028.

Alongside the new fabs, Taiwan Semiconductor continues to convert the 5-nanometer tool to support 3-nanometer capacity in Taiwan. It is also working to drive greater productivity across its global fab locations to generate more wafer output while focusing on capacity optimization across nodes, including flexible capacity support among N7, N5 and N3 nodes.

Financially, TSM management projects N3 gross margin to cross over the corporate average in the second half of 2026.

TSM’s Peer UpdatesMicron Technology, Inc. (MU - Free Report) and General Motors announced a Strategic Customer Agreement to secure a long-term, reliable supply of memory and storage platforms critical to GM’s vehicle production and delivery at scale. Both companies are working together to strengthen semiconductor and automotive supply chains while supporting the next generation of U.S. manufacturing and innovation. The agreement reflects Micron’s ongoing investments to expand and localize supply for automotive customers, including advanced DRAM manufacturing in Manassas, VA.

GlobalFoundries (GFS - Free Report) recently announced production readiness for its SLATE wafer-to-wafer bonding technology on the 9SW radio-frequency silicon-on-insulator (RF-SOI) platform, enabling advanced 3D integration for compact, high-performance cellular front-ends. Manufactured at GlobalFoundries’ 300mm facility in Singapore, 9SW SLATE technology is expected to ramp up to volume production by the second half of 2027. First introduced in 2023, the 9SW RF-SOI platform is GF’s most advanced RF solution for front-end modules, spanning sub-8GHz and FR3 frequency ranges for 5G mobile devices and satellite communications. 

The Zacks Rundown for TSM StockSo far this year, Taiwan Semiconductor shares have rallied 47.1% compared with the industry’s 57.2% growth. 

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In terms of valuation, TSM trades at a forward, 12-month Price/Earnings (P/E) of 27.43X compared with its 24.29X median and the industry average of 27.42X.

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Consensus estimates for Taiwan Semiconductor’s2026 and 2027 earnings are showing an upward trend over the past 60 days.

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Taiwan Semiconductor currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Intel (NASDAQ:INTC | INTC Price Prediction) and Taiwan Semiconductor Manufacturing (NYSE:TSM) both posted Q1 2026 results that frame the same question from opposite sides: who builds the world’s most advanced chips, and where. TSMC remains the engine of AI silicon. Intel is the Western alternative hyperscalers are quietly funding. Geography matters more than the numbers.

Foundry Bets Lift Intel. AI Wafers Carry TSMC. Intel’s Q1 came in at $0.29 in non-GAAP EPS on $13.58B revenue, with Data Center and AI up 22% YoY and Foundry up 16% YoY. CEO Lip-Bu Tan stated: “The next wave of AI will bring intelligence closer to the end user… This shift is significantly increasing the need for Intel’s CPUs and wafer and advanced packaging offerings.” A $4.07B Mobileye-related restructuring charge dragged GAAP results into a loss.

TSMC’s quarter was cleaner. Q1 revenue hit NT$1,134.10B, up 21.4% YoY, and net income jumped 43.82% to NT$572.48B. Gross margin reached 66.2%, a profitability profile Intel cannot match today. April monthly revenue rose 17.5% YoY, confirming AI wafer demand is accelerating.

Western Subsidies vs. Taiwanese Scale Intel’s foundry roadmap anchors a politically insulated U.S. manufacturing base: $8.9B in CHIPS Act funding, a $5.0B NVIDIA equity investment, $2.0B from SoftBank, and Intel 18A ramping at Fab 52 in Arizona. Xeon 6 was selected as the host CPU for NVIDIA’s DGX Rubin NVL8 systems. Intel joined the Terafab project alongside SpaceX, xAI, and Tesla. Hyperscalers are realizing that relying on a single island for over 90% of advanced chip fabrication is an unsustainable operational risk.

TSMC is diversifying with fabs in Arizona, Japan, and Germany, with its Arizona tax credit rate raised from 25% to 35%. Customer concentration is striking: the top 10 customers represent 84% of accounts receivable. Most leading-edge research stays in Hsinchu.

Lens Intel TSMC Core Bet U.S. foundry as secure second source Taiwan-anchored leading-edge dominance Key Vulnerability Execution on 18A yields and customer wins Geopolitical concentration risk Profit Engine Xeon, advanced packaging, foundry ramp 3nm and 2nm AI wafers The Next Test Is Intel 18A Customer Wins Watch whether Intel converts its Google ASIC partnership and NVIDIA wafer relationship into named 18A foundry customers before management decides on the Intel 14A go-ahead. For TSMC, monitor whether the 2D transistor and CoPoS packaging roadmap stays on schedule while Arizona expansion absorbs more capex. Intel guided Q2 to $13.8B-$14.8B in revenue with non-GAAP EPS of $0.20, so the margin path matters more than the headline.

Why Intel Offers Asymmetric Upside Intel fits investors seeking exposure to the structural reshoring trade, even with restructuring noise and a CFO who trimmed shares at $109.82. The stock is up 256.78% YTD, so the easy money is gone, but the foundry thesis has years to play out. TSMC remains the better business by every operating metric, with 46.5% profit margin proving it. TSMC may appeal to investors prioritizing quality compounding. If China-Taiwan tensions cool meaningfully, the relative case for TSMC strengthens. Until then, Intel’s political insulation is the edge the market is still underpricing.

There are many ways to invest in artificial intelligence (AI), but overall, there is no business better positioned to compete than Taiwan Semiconductor Manufacturing (TSM 1.61%). It produces chips for Nvidia, Apple, and other leading tech companies. It's a wide-moat business that provides broad exposure to the AI chip market with one stock, making it the smartest way to invest in AI infrastructure.

The stock's price has climbed 110% over the past year. In the first quarter, revenue surged 40% year over year, driven by insatiable demand for AI chips powering advanced computing systems.

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It's not easy to replicate what TSMC does. It takes at least a few years to complete the production process, including testing and qualifying a new leading-edge process node. This makes it costly for customers to switch suppliers once a chip blueprint has been sent to TSMC for production.

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TSMC controls over 70% of the global foundry market, according to Counterpoint. This dominant lead is reflected in its high margins. Over the last year, TSMC's net profit margin was 47%.

There is growing competition from other foundries, including Intel and Samsung. Still, recent reports indicate that TSMC is raising prices for its process nodes amid strong demand and higher costs of memory components used in chipmaking. This reinforces its wide competitive moat in the industry. The stock trades at about 30 times this year's earnings estimate, which isn't cheap but reasonable, and analysts project 31% annualized earnings growth over the next several years.

John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Apple, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

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Taiwan Semiconductor Manufacturing (NYSE:TSM | TSM Price Prediction) just put the rest of the chip sector on notice. Monthly revenue for May 2026 hit NT$416.98 billion, up 30.1% year over year, and CEO C.C. Wei is telling investors the company will “grow by above 30% in U.S. dollar terms” for full-year 2026.

Shares are already up 44.32% year to date, closing at $436.39 after a 6.69% single-day pullback. Can TSM print $500 before 2026 is over?

What’s Holding TSMC Back Right Now TSM is up 109.73% over the past year and trades just 1% from its 52-week high of $476.31. The 8.12% one-month gain ran headfirst into valuation fatigue, and the most recent session lopped off 6.69% in a single day.

Wei flagged caution on the call, citing “the impact of rising component prices” and Middle East macro risks. With a beta of 1.25, this stock amplifies tech-sector wobbles. Add a patent infringement complaint at the U.S. ITC and persistent NT-dollar FX pressure, and traders have hit pause near $440.

Wall Street Sees 8.5% Upside. Our Model Says More Sell-side analysts carry an average target of $473.40, backed by 5 Strong Buys, 12 Buys, 2 Holds, and zero sell ratings. Our internal model anchors on a base case of $512.37 with a bull case of $534.19 and a bear case of $417.73. Confidence is rated at 90%.

With 89% of the bullish/bearish coverage tilted bullish and quarterly earnings growth running at 58.4% year over year, the Street is anchoring to old EPS assumptions. $500 sits between consensus and our base case, the most reachable round number on the board. BofA raised the firm’s price target on TSMC to $590 from $490 and keeps a Buy rating on the shares.

The Path to $500 Per Share Reaching $500 from today’s price of $436.39 requires a gain of 14.6%. With forward EPS of $14.50, a price of $500 implies a forward P/E of 35x. Our base case of $512.37 already implies 36x, so $500 actually demands slightly less multiple expansion than where our model already sits.

Earnings do the heavy lifting. Q1 2026 net income jumped 43.82% YoY, and Q2 guidance implies USD $39.0 billion to $40.2 billion in revenue, a 32% YoY increase at the midpoint. Wei said “AI-related demand continues to be extremely robust” and that the shift to agentic AI is driving “higher 50s of CAGR” in AI accelerator demand.

Add the 35% Arizona investment tax credit effective January 1, 2026 and a $52-56 billion CapEx envelope, and the forward multiple compresses naturally as EPS catches up. The primary risk is a Taiwan geopolitical shock that re-rates the entire foundry complex lower.

Where TSMC Trades Today vs Its Earnings Power At $436.39 against forward EPS of $14.50, TSM trades at a forward P/E of roughly 30x. That is reasonable for a business compounding earnings near 50%. Shares sit in the upper third of the 52-week range of $218.79 to $476.31, and the 10-year return is 2,086.07%. When a company owns the leading-edge node and prints 58% earnings growth, paying 30x forward is the bull case.

Is $500 Realistic? Reaching $500 requires a 14.6% gain from here. That is realistic before year-end 2026.

Three things need to go right: Q2 results hit the upper end of Wei’s $40.2 billion guide, gross margins land above 66%, and the AI accelerator order book stays at the higher 50s CAGR Wei flagged. What derails it is a Taiwan Strait headline or a meaningful customer capex pause. We’ve outlined the blueprint for how Taiwan Semiconductor Manufacturing could reach $500 in 2026.

Cerebras Systems CBRS remained in focus Monday after Wedbush reiterated its Outperform rating and $270 price target ahead of the AI chipmaker's first quarterly earnings release as a public company.

Wedbush said demand conditions for Cerebras appear supportive, citing the company's commercial relationships with OpenAI and Amazon. The firm noted that future results may depend more on operational execution and production scaling than customer demand.

Cerebras, which debuted on the Nasdaq in May, is developing large-scale AI processors and computing infrastructure. Wedbush said manufacturing capacity from Taiwan Semiconductor Manufacturing (TSM) could provide an opportunity for higher-than-expected output over the next two years.

The brokerage also pointed to potential benefits from the company's next-generation WSE-4 processor, which market observers expect could enter production in late 2026 or early 2027. Any updates related to that roadmap may be viewed favorably by investors.

Wedbush added that growing demand for AI inference computing, combined with industry supply constraints, could support Cerebras' longer-term expansion efforts as it seeks a larger position in the AI accelerator market.

The likes of Nvidia (NVDA) and Micron (MU) remain the front and center of all AI-related debates in 2026, but billionaire investor Philippe Laffont is approaching the boom from a different angle.

Speaking recently with CNBC, the founder of Coatue Management revealed his $90 billion hedge fund prefers a classic “picks-and-shovels” strategy rather than wagering on individual chipmakers like NVDA.

His preferred means of gaining exposure to AI include TSMC, Lam Research, and Applied Materials Inc – the foundational silicon factories that every semiconductor company relies on.  

Laffont owns TSMC stock for one simple reason: no matter who designs the next breakthrough AI chip, they must go through Taiwan Semiconductor Manufacturing.

For example, Amazon is deploying its custom Trainium silicon, Alphabet Inc is committed to its Tensor Processing Units (TPUs), and a wave of agile startups is entering the GPU space.

Yet, as Laffont points out, “All of them at the end of the day will need the same machines” – and almost all of them depend on TSMC’s cutting-edge foundry nodes to manufacture their silicon.

Holding a sizable stake in TSMC allows Coatue to remain agnostic in the fiercely competitive chip race while steadily capturing the rewards of a capex cycle that shows no signs of slowing down.

To build the microscopic, hyper-dense architectures required for modern AI workloads, specialized hardware is mandatory.

This reality leads Philippe Laffont directly to Lam Research Corp – an industry giant dominant in etching and deposition technology.

Modern artificial intelligence infrastructure is shifting into what the tech investor calls the “agentic era,” in which autonomous software agents execute long, multi-layered workflows.

This technological pivot needs huge amounts of high-bandwidth memory (HBM) and specialized advanced packaging – and LRCX manufactures the precise capital equipment needed to etch deep, flawless vertical pathways in advanced memory chips.

For Laffont, owning Lam Research shares provides a direct window into the physical layer of the AI ecosystem, capturing reliable revenue from every tech company building out data centers.

Completing Laffont’s top trio of semiconductor capital equipment holdings is Applied Materials, the world's largest supplier of tools used to fabricate advanced microchips.

As global electronics manufacturing becomes increasingly localized, AMAT shares benefit from massive structural headwinds and government subsidies.

Laffont – an MIT graduate and notable alumnus of Julian Robertson’s Tiger Management – values the company’s near-monopoly on materials engineering solutions.

“If I’m a supplier to the fabs, I don’t need to make an exact bet on which of the chips is going to win,” he explained.

This strategic diversification protects Coatue Management’s portfolio from rapid obsolescence cycles while giving investors exposure to the hyper-growth of global AI factory expansions.

Note that all three names on Philippe Laffont’s list pay a dividend as well.