2Q26 earnings preview: Robust demand and pricing underpin capex expansion

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2Q26 earnings preview: Robust demand and pricing underpin capex expansion

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Taiwan Semiconductor Manufacturing Co.

2Q26 earnings preview: Robust demand

and pricing underpin capex expansion

Reiterate Rating: BUY | PO: 3,100 TWD | Price: 2,415 TWD

Solid 2Q26/3Q26 demand; GM resilient through 2nm ramp 13 July 2026

We expect TSMC’s 2Q26 sales tracking to +12% QoQ and could grow 10-15% QoQ in Equity

3Q26, on HPC product refreshes and benefit from price hike in early ‘26. With favorable

FX, utilization and pricing partially offset by dilution from 2nm ramp skewed to 2H26

Key Changesand higher summer electricity cost, its GMs could stay stable at ~67-68% in 3Q26 (vs

street/buyside 68-70% expectations). VIS disposal gain could lift NT$1.95 EPS in 2Q26. (NT$) Previous Current

Price Obj. 3,060.00 3,100.00

Stronger project visibility into 2027 drives capex upside 2026E EPS 102.55 106.78

We expect TSMC’s sales to grow by 39% YoY in US$ in ’26 backed by the ramp for new 2027E EPS 150.06 153.00

gen GPUs and ASICs, stronger CPUs, Apple’s product launches and now supplemented by 2028E EPS 176.81 178.13

firmer pricing outlook on mature nodes. On solid demand pipeline and tight equipment 2026E EBITDA (m) 3,915,419.5 3,989,367.9

supply, we expect its capex to reach US$58bn in ’26 (vs. US$56bn guide) and further 2027E EBITDA (m) 5,556,714.1 5,662,101.1

grow to US$78bn/US$83bn in ‘27/28 for further clean room and capacity expansion. 2028E EBITDA (m) 6,431,146.3 6,495,806.6

Checkpoints: AI demand sustainability and competition Haas Liu >>

Amid hyperscalers’ need of fund raising for further spend on the AI infrastructure in a Research Analyst

component cost inflation environment, TSMC’s comment on AI investment sustainability Merrill+886 2Lynch2376 (Taiwan)3727