TSM Q2 results exceeded expectations and was raised bullish by analysts, but its share price remaine

Highlights

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Highlights

TSM fell about 2% on Thursday, despite second-quarter results exceeding expectations and raising its 2026 revenue growth forecast.

Wedbush raised its target price to NT$3000 and maintained its "Outperform Market" rating;Susquehanna raised its target price to US$600;Needham maintained its "Buy" rating and a target price of US$480.

TSMC raised its 2026 capital expenditure forecast from US$52 billion to US$60 billion to US$64 billion, and promised an additional US$100 billion to expand production in Arizona.

Artificial intelligence-driven high-performance computing continues to drive growth, but analysts point out that weak demand for mature chip processes may become a concern.

TSMC raised its quarterly dividend to $1.1136 per share from $0.95.

TSMC (TSM) fell about 2% on Thursday despite strong second-quarter results and an increase in its full-year revenue growth forecast. TSMC opened at US$419.43, with a 52-week trading range of US$223.70 to US$479.00, and a market value of approximately US$2.18 trillion.

Earnings per share for the second quarter were $3.49, exceeding analyst consensus expectations of $3.31 and $0.18 higher. Revenue reached US$35.49 billion, slightly higher than the expected US$35.47 billion, a year-on-year increase of 40.6%.

Artificial intelligence-related high-performance computing demand is the main driver of exceeding expectations, and analysts expect this trend to continue into the second half of 2026.

Wedbush maintained its "outperform market" rating and raised its target price from NT$2900 to NT$3000. Analyst Matt Bryson said there was no reason to change the optimistic outlook, with strong third-quarter and full-year results guidance and competitive threats still viewed as a long-term issue.

Susquehanna raised its price target to $600 from $575, maintaining a "positive" rating. The agency emphasized that TSMC will increase its capital expenditures in 2026 from $52 billion to $60 billion to $64 billion, plus a $100 billion Arizona investment. Susquehanna predicts that TSMC's cumulative capital expenditures from 2026 to 2028 will exceed US$230 billion.

Needham maintains a "buy" rating and a price target of $480, calling it a "solid performance." The agency believes that accelerating computing demand related to proxy artificial intelligence is a catalyst for growth, but management has not yet quantified this opportunity.

Impact on Nvidia, Apple and the broader ecosystem

Wedbush made it clear that given Nvidia's dominant position in the artificial intelligence chip market, TSMC's results signal positive momentum. For semiconductor capital equipment suppliers, the increase in capital expenditures is consistent with the strong results outlook released by ASML the day before.

For Apple, the situation is mixed but overall positive. Smartphone revenue increased 11% year-on-year, but growth slowed down from the first quarter. Analysts believe that continued growth indicates that Apple's future production is healthy.

Concerns about mature process nodes emerge

Not all indicators are positive. Needham's Charles Shi pointed out that revenue from 45/40 nanometer, 28 nanometer and 16 nanometer nodes fell month-on-month, reversing the upward trend in the first quarter. Shi said this "may be a warning sign" that rising memory prices may have put pressure on mainstream semiconductor demand.

Demand for mature nodes is generally weak, with the exception of a few areas such as power management ICs and CMOS image sensors for artificial intelligence data centers.

In terms of dividends, TSMC will increase its quarterly dividend from US$0.95 per share to US$1.1136, which will be paid on October 8 to registered shareholders as of September 16.

Institutional activities are also becoming more active. Linden Rose Investment LLC expanded its TSMC position by 223.2% in the first quarter to 37239 shares, worth approximately US$12.6 million, becoming its third-largest position, accounting for 16.5% of its portfolio.

Analysts have a consensus rating of "moderate buy" for TSMC, with an average price target of $449.38. Research analysts forecast full-year earnings per share of $15.44.

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