TSMC's Revenue Grew 33% Last Quarter. Here's Why Investors Should Be More Excited About What's Coming Next.
TSMC reported a 33% year-over-year revenue increase to $40.2 billion in Q2, driven by strong demand for advanced chips. The company projects accelerated growth for Q3, with revenue expected between $44.6 billion and $45.8 billion, representing up to 37% growth. Full-year revenue is forecast to rise 40%. Key drivers include the ramp-up of 2-nanometer technology and increased silicon demand from agentic AI. TSMC also announced an additional $100 billion investment in Arizona foundries.
Taiwan Semiconductor Manufacturing (TSM 3.49%) reported second-quarter earnings on Thursday, again demonstrating the dominance of the globe’s leading foundry. Revenues were up 33% from a year ago to $40.2 billion.
But I think investors should be even more excited about the future -- TSMC, as it’s known, projected that its revenue growth will accelerate in the third quarter. Management’s guidance forecasts revenue between $44.6 billion and $45.8 billion in the third quarter. At the midpoint of that range, that would represent 37% growth over the $31.1 billion TSMC recorded in the third quarter of 2025.
And full-year revenue would increase by 40% from a year ago, management said.
It’s really hard for a company the size of TSMC to be accelerating revenue growth. After all, we’re talking about a company with a market cap of $2.1 trillion, making it the sixth-largest publicly traded company in the world.
Image source: TSMC.
But rather than slowing after a solid second quarter, TSMC expects revenue growth to quicken in Q3, suggesting that the demand for advanced chips -- and TSMC’s expert foundry capabilities -- remains exceptionally strong.
TSMC’s earnings by the numbers
TSMC has tremendous reach -- the company produced more than 12,680 different products in 2025, using 305 different process technologies. It has an estimated 73% market share in the global foundry market and makes chips for the biggest chipmakers on the planet, including Nvidia, Advanced Micro Devices, and Broadcom.
Nearly two-thirds of TSMC’s revenue comes from manufacturing chips 5 nanometers and smaller -- and that business is changing dramatically. In the first quarter, TSMC got 36% of its revenue from 5 nm chips and 25% from 3 nm chips. But in this quarter, TSMC saw its first revenue from even more advanced 2 nm chips, reportedly priced at $30,000 per wafer. Revenue from 3 nm chips increased from 25% to 30%, and 5 nm chip revenue dropped to 33%.
NYSE: TSM
Key Data Points
“Our business in the second quarter was supported by strong demand for our leading-edge process technologies,” Chief Financial Officer Wendell Huang said. “Moving into third quarter 2026, we expect our business to be supported by continued strong demand for our leading-edge process technologies, including the steep ramp-up of our 2-nanometer technology.”
Management announced it will invest another $100 billion in the company’s Arizona foundries to increase 2 nm production there, bringing its total commitment in the state to $265 billion.
Agentic AI is a revenue driver
While artificial intelligence has dominated the stock market over the last three years, this year is seeing greater emphasis on agentic AI -- programs that can operate independently to execute tasks without human intervention.
TSMC CEO C.C. Wei told analysts during the company’s earnings call that creating the hardware to power agentic AI will be profitable for his company. “The emergence of agentic AI is leading to a resurgence in the role of CPUs in AI data centers, which drive more silicon demand in addition to AI accelerators,” he said. “We believe this is positive for TSMC, as no matter what CPU approach is taken, whether it's an x86, Arm-based, or RISC-V architecture, they are almost all TSMC's customers.”
What to know from TSMC’s earnings report
The biggest takeaway here is that TSMC had a solid quarter, but management expects things to get even better. The $2-trillion company is projecting accelerated revenue growth, fueled by the ramp-up of its 2 nm chips. The growth of agentic AI provides another tailwind for TSMC stock, as demand for its manufacturing capacity will remain strong.
Investors have plenty of reasons to be bullish about TSMC stock through 2026.
