TSMC Stock Poised for Surge After July 16 on Strong Earnings Outlook, Advanced Process Demand

Taiwan Semiconductor Manufacturing Co. (TSMC) shares are poised for a potential surge following the release of its second-quarter financial results on July 16. Analysts anticipate that robust demand for its advanced chip manufacturing processes and strong pricing capabilities will drive earnings beyond Wall Street's expectations.

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TSMC's strong advanced process demand and powerful pricing capabilities may enable the company to deliver results exceeding Wall Street expectations, thereby driving accelerated stock price increases.

While TSMC's stock has climbed 35% this year, it has lagged behind the Philadelphia Semiconductor Index's 67% gain. However, the upcoming earnings report is expected to showcase the company's ability to outperform. Analysts predict second-quarter earnings per share could surpass $3.83, with net profit potentially rising 55% year-on-year. Furthermore, third-quarter profit is forecasted to increase 45% annually, suggesting actual performance might even exceed these projections.

TSMC, the world's largest contract chip manufacturer with a 73% market share according to Counterpoint Research, plays a pivotal role in the global semiconductor supply chain. It produces chips designed by major fabless companies like Nvidia, Broadcom, AMD, and Apple, serving diverse applications including data centers, smartphones, and personal computers.

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The second quarter's earnings per share is highly likely to exceed $3.83, with net profit increasing by 55% year-on-year, surpassing Wall Street expectations.

Recent reports indicate TSMC has begun implementing price increases of 5% to 10% for its advanced chip manufacturing processes. This move, initially not planned, reflects sustained strong chip demand. These advanced processes, used in AI chips for data centers, smartphones, and PCs, are crucial for the booming AI accelerator market. TSMC projects its AI accelerator-related revenue to maintain a high compound annual growth rate of over 50% through 2029.

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TSMC is raising prices for its 7nm and below advanced processes by 5% to 10%.

With the semiconductor industry's rapid growth, TSMC anticipates continued supply tightness, making further price hikes possible. The company recently revised its forecast, predicting global semiconductor industry revenue could reach $1.5 trillion by 2030, a 50% increase from previous estimates. To meet demand for high-performance computing and smartphones, TSMC is accelerating the construction of advanced wafer fabrication plants. The superior performance and energy efficiency of advanced processes, coupled with higher pricing, are expected to further boost TSMC's revenue and profits, potentially exceeding the current analyst forecast of 49% profit growth for 2026.

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The compound annual growth rate of revenue related to AI accelerators is expected to remain at a high level of over 50% until 2029.