TSMC's profits hit a record high for the fifth consecutive quarter. Is the "AI megatrend" continuing?

TSMC, the world’s largest contract semiconductor manufacturer, reported a 77% increase in net income and a 36% increase in revenue in the second quarter compared to the same period last year. The results exceeded market expectations amid a sharp rise in global demand for artificial intelligence chips, according to Reuters. CNBC notes that this marks the fifth consecutive quarter in which TSMC’s net income has hit a record high.

TSMC, which manufactures chips for global technology leaders such as Nvidia, Apple, and Broadcom, saw its net profit for the April-June period rise to 706.6 billion New Taiwan dollars (about $21.99 billion) year-over-year. This result significantly exceeded LSEG’s consensus forecast of 632.6 billion New Taiwan dollars, Reuters notes. The company’s revenue on a year-over-year basis increased by 36% to 1.27 trillion New Taiwan dollars (about $39.45 billion), compared with the expected 1.264 trillion.

The Taiwanese tech giant's net profit for the second quarter of 2026 set a new all-time high for the fifth consecutive quarter, rising 23.4% compared to the previous three-month period, according to CNBC.

As TSMC CFO Wendell Huang noted during the earnings conference call, the high-performance computing (HPC) segment was the key driver of the strong results, with the smartphone segment coming in second and the Internet of Things (IoT) division in third. In terms of process technologies, advanced semiconductors were the main sources of revenue: 5-nanometer chips accounted for 33% of the company’s revenue in the second quarter, while 3-nanometer solutions accounted for 30%.

“The global megatrend in AI continues to drive demand for ever-increasing computing power, which is fueling sustained interest in advanced semiconductors,” said TSMC CEO and Chairman of the Board of Directors Xi-Xi Wei during an earnings call (quoted by Investing.com).

According to the company’s CEO, the enormous demand for its products from key U.S. partners necessitated a sharp increase in production capacity. Consequently, TSMC raised its capital expenditure forecast for 2026 to a range of $60–64 billion, which significantly exceeds the previous guidance of $52–56 billion.

Part of these funds will be used to scale up projects in Arizona, where the company plans to invest an additional $100 billion, bringing its total investment in the state to $265 billion, according to CNBC. The funding will go toward the construction of several plants for the mass production of promising 2-nanometer chips, as well as facilities for advanced chip packaging.

For the current—third—quarter, TSMC forecasts revenue in the range of $44.6 billion to $45.8 billion, with an operating margin of 56% to 58%.

Shares of TSMC—Asia’s most valuable company—rose 1.23% on Thursday in Taiwan. Since the start of this year, the company’s stock price has risen by more than 59%. In the U.S., TSMC’s American Depositary Receipts (ADRs) are down nearly 4% in premarket trading. Year-to-date, they are up 40%.

Analysts' consensus forecast for the company's stock is positive. The vast majority of experts recommend buying the stock: 32 experts have issued a “buy” recommendation (Buy and Outperform ratings), while one analyst advises holding the stock (Hold). There are no “sell” recommendations.

Nevertheless, TSMC’s optimistic forecasts and strong analyst estimates are meeting with growing skepticism from a wide range of investors, according to Goldman Sachs analysts. Doubts are increasingly being raised in the market about the wisdom of such massive investments in AI infrastructure. Many market participants fear that the actual payback period for trillion-scale investments in artificial intelligence technologies may turn out to be significantly longer than previously expected.

This article was AI-translated and verified by a human editor