TSMC Hits $40.2B Q2 Revenue, Hikes 2026 Growth Above 40%
Taiwan Semiconductor reported a record $40.2 billion in second-quarter revenue, driven by artificial intelligence demand, and signaled that its most profitable chip technology ramp is just beginning.
Taiwan Semiconductor Manufacturing posted $40.20 billion in second-quarter revenue, beating estimates by roughly 11% as sales climbed 36% year over year. Diluted ADR earnings reached $4.31, surpassing the $3.89 consensus. The world's largest contract chipmaker disclosed the results in a July 16, 2026 filing.
High-performance computing accounted for 66% of total revenue, underscoring the company's position as the primary hardware supplier for artificial intelligence infrastructure. Advanced process nodes of 7 nanometers and below generated 77% of wafer revenue, split between 5nm at 33% and 3nm at 30%. Gross margin expanded 9.1 percentage points year over year to 67.7%, landing at the top of the company's guided range.
The revenue surge was not primarily a volume story. While wafer shipments increased 16.6% to 4,336 thousand 12-inch equivalents, much of the top-line growth was driven by a favorable product mix and pricing power for cutting-edge chips. This dynamic highlights the strategic premium the market places on the most advanced semiconductor manufacturing capabilities.
2nm Transition Drives Outlook
The most significant detail for forward-looking investors is the commercial debut of the 2-nanometer node, which comprised only 3% of wafer revenue this quarter. Management expects a steep 2nm ramp in the third quarter. Because this node transition has barely begun, it represents the largest upcoming leg of TSM's margin-expansion cycle.
That near-term ramp will pressure near-term profitability. Management guided third-quarter gross margin to between 65% and 67%, a slight contraction from the second quarter's peak as the company absorbs the initial costs of the new technology.
Reflecting the sustained demand for AI accelerators, management raised its full-year 2026 revenue growth outlook to slightly above 40% in US dollar terms, up from a previous forecast of roughly 30%. Third-quarter revenue guidance sits between $44.60 billion and $45.80 billion, implying continued sequential acceleration. To fund the massive 2nm capacity buildout, capital expenditures hit $496 billion New Taiwan dollars, a 65.57% increase year over year.
Despite the headline beat and raised guidance, shares fell 3.3% in the hour following the filing to $409.35. This pullback mirrors the reaction to the prior quarter's report, which initially closed up just 0.22% before eventually recovering. The stock remains up 38.73% year to date and has returned 78.95% over the past 12 months.
