Bernstein: TSMC's Q2 Revenue Exceeds Guidance High-End, Advanced Node Demand Still Outpacing Capacity

BlockBeats News, July 16th. Bernstein stated in its latest research report that TSMC's second-quarter revenue reached the high end of the company's guidance range, slightly exceeding market expectations, demonstrating that advanced processes and AI-related demand remain strong.

The firm maintained its Outperform rating on TSMC, with a target price of NT$2,780 for Taiwan-listed shares and $430 for the U.S. ADR. Based on the July 13th closing price of NT$2,440 for Taiwan-listed shares, the target price implies approximately 14% upside.

Bernstein expects investors to focus on three key areas at the upcoming earnings conference: expansion plans, gross margin outlook, and the N2 process ramp-up. The firm forecasts TSMC's 2026 capital expenditure to be $56 billion and $68 billion in 2027; CoWoS monthly capacity is expected to reach 135,000 wafers by the end of 2026 and increase to 195,000 wafers by the end of 2027.

On the gross margin front, Bernstein projects TSMC's 2026 gross margin to increase from about 60% last year to 65%, driving a year-on-year EPS growth of approximately 50% to NT$102.

The report also noted that due to TSMC's ongoing tightness in advanced process capacity, customer interest in Samsung Foundry and Intel Foundry is on the rise. Samsung is reportedly raising prices by about 15% for some new customers on 4/5nm and 8nm nodes and is in talks with Anthropic and Meta for a potential 2nm AI chip project; there are also market rumors that Intel Foundry may participate in a Google TPU-related project.

However, Bernstein believes that these dynamics will not substantially impact TSMC's revenue in the short term. The firm stated that TSMC is at least one generation ahead in technology nodes, has a better execution track record, larger scale, and demand for advanced processes significantly exceeds its available capacity. Even if Samsung or Intel win some projects, it more reflects TSMC's capacity constraints rather than a weakening competitive position.