Tech buyers and Wall Road are ready for Taiwan Semiconductor or TSMC to kick-start the busy a part of the second quarter earnings season when it experiences on Thursday, July 16.
The AI chip manufacturing powerhouse will present Wall Road with crucial insights into what’s subsequent on the substitute intelligence entrance.
TSMC might need to supply sturdy steerage to reassure buyers that the AI hyperscalers’ capex spending spree stays in full power after Meta stated lately that it could start promoting extra AI computing energy to clients.
The place the Inventory Market Sits Heading into Q2 Earnings Season
The inventory market has cooled down heading into the unofficial begin of Q2 earnings on Tuesday, July 14, when JPMorgan and different huge Wall Road banks report.
The Nasdaq is buying and selling roughly the place it was two months in the past after pulling again from its early June highs. The bulls are preventing to carry their floor on the tech-heavy index’s 50-day transferring common and its early Might breakout ranges. They did simply that on Thursday, sending the Nasdaq 1.3% greater to overhaul its 50-day once more.
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The bulls are banking on one other spectacular earnings season from huge tech and past. Whole S&P 500 earnings are projected to develop by 24% YoY based mostly on the newest Zacks information—up from 14% in early January and 21.2% in early June.
On the know-how entrance, whole tech sector earnings are anticipated to develop 48.5% in Q2 on 28.0% greater revenues. Taiwan Semiconductor’s report on July 16 will present Wall Road important insights into what to anticipate from AI firms, together with Nvidia, and your complete tech sector within the second half.
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Is TSMC the Greatest Lengthy-Time period Purchase and Maintain Inventory on Wall Road?
Semiconductors are arguably probably the most complicated and significant applied sciences that people have ever created. Chips are the lifeblood of your complete technology-driven financial system and the muse of the AI age. That is why Nvidia, Micron, and tons of different semiconductor shares have skyrocketed over the previous 5 years and within the first half of 2026.
The all-important function that semiconductors play in tech and the financial system is why buyers should take into account shopping for the firm that bodily builds and manufactures virtually the entire cutting-edge semiconductors for Nvidia and practically each different agency competing to win the AI arms race.
Taiwan Semiconductor Manufacturing Firm TSM is maybe crucial know-how firm on the planet, constructing and manufacturing semiconductors used for AI improvements and far more. (Notice: Taiwan Semi or TSMC trades beneath the ticker TSM within the U.S.)
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TSMC reportedly captures 60% of your complete international chip foundry market and 90% of superior semiconductor manufacturing. Taiwan Semi has spent many years carving out what’s now a virtually impenetrable moat round its modern chip-building enterprise.
Nvidia NVDA depends on TSMC to fabricate its most subtle AI chips, as do different tech titans and Magazine 7 firms. TSMC stated it “served 534 clients and manufactured 12,682 merchandise for numerous purposes” in 2025.
TSMC was based in 1987 on a easy however revolutionary concept dubbed the “pure-play foundry” mannequin. The tech firm determined it could focus solely on manufacturing superior semiconductors for different firms, by no means aiming to design or promote its personal branded merchandise.
This founding precept helped Taiwan Semi construct belief with clients like Apple, Nvidia, AMD, and Qualcomm. Apple AAPL, Nvidia and others depend on TSMC due to its experience. On high of that, NVDA executives and others can sleep simple at evening understanding that Taiwan Semi gained’t compete in opposition to them.
Because of this, TSMC attracted large orders, invested closely in cutting-edge applied sciences, rising into the world’s most dominant chip producer by way of unmatched scale and experience.
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It’s not hyperbolic to say that AI and know-how development and innovation would grind to a halt with out TSMC. That is precisely why Taiwan Semi is addressing one in every of its solely potential shortfalls: geopolitical fears by increasing its manufacturing footprint exterior of Taiwan into the U.S., Japan, and elsewhere.
The corporate is actively constructing fabs within the U.S. But, in an indication of simply how essential and cutting-edge TSMC is, the Taiwan-based agency needed to carry 1000’s of staff from the small island to the Arizona desert to assist construct the complicated manufacturing vegetation.
The Chip Builder’s AI-Boosted Progress Outlook
Taiwan Semi is ramping up its industry-leading 3-nanometer manufacturing to assist the AI arms race. So-called superior applied sciences made up 74% of its whole wafer income in Q1 FY26, with 3-nanometer chips accounting for 25% of TSMC’s quarterly wafer gross sales.
The main chip builder stated earlier this yr that it expects to develop its income by 30% in 2026 as a part of a compound annual development price (CAGR) of ~25% between 2024 and 2029.
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Taiwan Semi is projected to develop its income by 32% in FY26 and 27% subsequent yr to succeed in $205 billion in FY27, doubling its 2024 gross sales ($88 billion), based mostly on Zacks estimates.
TSMC is projected to develop its adjusted EPS by 45% in 2026 and 27% in 2027, based mostly on the newest Zacks estimates. This development outlook would see the agency submit earnings of $19.50 per share subsequent yr, practically quadrupling 2023’s EPS. TSMC’s upward earnings revisions earn it a Zacks Rank #2 (Purchase), and it’s crushed our quarterly estimate for 5 years operating.
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Taiwan’s stability sheet is powerful, with additional cash and equivalents ($109 billion) than whole liabilities ($86 billion). It’s also churning out spectacular free money move development over the past a number of years. Its robust monetary place helped TSM really feel comfy elevating its 2026 capex steerage to $52-$56 billion, blowing away 2025’s $40.9 billion.
Purchase TSMC Now, Or Look forward to a Pullback?
The dividend-paying chip maker inventory has soared ~5,000% up to now 20 years vs. Tech’s ~1,100%. TSM has ripped 340% greater up to now three years, together with its Nvidia-crushing 90% cost within the trailing 12 months to commerce close to its latest highs.
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TSM is trying to carry floor at its 50-day transferring common heading into its Q2 earnings launch. Some buyers would possibly need to purchase the inventory now earlier than earnings in preparation for a potential breakout. Others would possibly need to see if Taiwan Semi lastly faces some wholesome promoting after its large rally.
The inventory market timing sport is exceedingly troublesome, which means that almost all long-term buyers ought to begin a place in TSMC every now and then add to it the following time it falls—which can occur sooner or later, there’s simply no telling when. The inventory hasn’t examined its 200-day transferring common in over a yr and it trades nicely above its 50-week.
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On the valuation entrance, Taiwan Semi trades consistent with the Tech sector regardless of its outperformance. It additionally trades at a 27% low cost to its 10-year highs at 24.9X ahead earnings, which is much from a bubbly valuation.
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Apple Inc. (AAPL) : Free Inventory Evaluation Report
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Taiwan Semiconductor Manufacturing Firm Ltd. (TSM) : Free Inventory Evaluation Report
This text initially printed on Zacks Funding Analysis (zacks.com).
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
