Taiwan Semiconductor Manufacturing Co. (TSMC) is poised to report another record quarterly profit on Thursday, but the chipmaker's stock faces a critical test as investors weigh the impact of potential delays in Nvidia's next-generation AI processor rollout.
The company releases second-quarter earnings at 2 a.m. ET on July 16. Analysts project net profit of NT$632.6 billion, a 59% year-over-year surge that would mark the fifth consecutive quarterly record. Revenue, already disclosed, rose 36% to NT$1.27 trillion, narrowly exceeding the NT$1.264 trillion consensus compiled by LSEG.
High Bar for TSMC Stock After 38% Rally
TSMC's U.S.-listed shares have climbed roughly 38% year-to-date, leaving little room for disappointment. Options markets imply a potential 5% swing in either direction by week's end, with the stock closing Tuesday at $420.39.
Investors will scrutinize gross and operating margins, which TSMC previously guided at 65.5% to 67.5% and 56.5% to 58.5%, respectively. Stronger pricing and high factory utilization could push results to the upper end of those ranges, offsetting rising costs from overseas expansion. Any net profit above NT$572.5 billion would set a new company record.
Dan Nystedt, research analyst at TriOrient, told Reuters that the revenue performance underscores healthy AI demand, supporting TSMC's advanced-node production and chip-on-wafer-on-substrate (CoWoS) packaging business.
Nvidia's Rubin Delay Casts Shadow
TSMC manufactures Nvidia's most advanced AI processors and provides the packaging that integrates GPUs with high-bandwidth memory. Nvidia's annual product cycle is a key driver of TSMC's advanced-node utilization and CoWoS demand.
KeyBanc analyst John Vinh recently flagged a slight delay to Nvidia's Vera Rubin rollout, citing thermal heat-lid issues and HBM4 qualification delays. While demand remains intact, a later volume ramp could shift production and revenue between quarters at a time when investors expect AI growth to accelerate in the second half.
Vinh believes the financial impact should be limited, as Nvidia can compensate by shipping more B300 Blackwell systems. He expects Rubin shipments to begin ramping in July and forecasts deliveries of roughly 1.7 million to 1.8 million units during 2026. KeyBanc retained an Overweight rating on Nvidia and raised its price target to $330 from $310.
For broader context, the Kospi Index Surges 15% from Lows as Samsung, SK Hynix Lead Tech Rally highlights the regional tech momentum, while Aehr Test Systems Surges 40% on Record Bookings, AI-Focused Pivot Drives Growth shows the broader AI supply chain strength.
Guidance and Capex to Determine Next Move
Bank of America analyst Haas Liu noted that supply-chain checks continue to indicate a strong AI demand pipeline. He believes TSMC could raise its full-year revenue-growth outlook from the current forecast of more than 30%.
Capital expenditure will be another key signal. TSMC previously guided 2026 spending at the upper end of its $52 billion to $56 billion range. Liu expects a potential increase to about $58 billion, reflecting tight equipment availability and capacity expansion across advanced logic, memory, and packaging. Nystedt, however, expects management to retain the existing range.
A larger budget would signal confidence in sustained demand from Nvidia, custom-chip designers, and hyperscale cloud companies. Unchanged spending would not necessarily indicate weakness, but could disappoint investors positioned for another upgrade.
As markets digest these signals, the Evening Digest: Trump Scraps Hormuz Fee, DeepSeek Preps IPO, Gold & Oil Rally and BlackRock Q2 Earnings: Wall Street Eyes 5% EPS Gain, $6.74B Revenue on ETF Inflows provide additional context on the broader financial landscape.
This article is for informational purposes only and does not constitute financial advice.
