TSMC Q2 Profit Hits Record; Capex Hike to $600-640B Pressures Stock

According to reports, TSMC reported record Q2 net profit of 7.066 trillion New Taiwan dollars (approximately $219.9 billion), up 77% year-over-year, and Q2 revenue of $402 billion on July 16. The company also raised its full-year revenue growth guidance from over 30% to slightly above 40%, citing robust AI demand and Agentic AI development. However, the company raised its 2026 capex budget from $520-560 billion to $600-640 billion, citing sustained customer demand and new applications. TSMC's ADR fell over 2% to $409.74 on the news, as investors reassess free cash flow outlook amid the higher spending and margin pressure.

For Q3, TSMC forecast revenue of $452 billion but projected operating margin of approximately 57%, about 70 basis points below market expectations. The company also warned that second-half gross margin would decline due to 2-nanometer process entering mass production with initially higher costs.