3 Key Reasons to Invest in TSMC Stock Amid 61% Q2 Profit Surge

Taiwan Semiconductor Manufacturing Company (TSMC) reported a 60.7% YoY surge in Q2 profit to NT$398.27 billion, driven by strong demand for AI chips and advanced processors for clients like NVIDIA and Apple. The company projects Q3 revenues to increase 38% YoY and expects a 30% surge in revenues for 2025. TSMC's dominance in the semiconductor industry, significant pricing power, and plans to expand manufacturing plants in Japan, Germany, and the US make it a compelling buy.

Taiwan Semiconductor Manufacturing Company (TSMC) reported a 60.7% year-over-year (YoY) surge in Q2 profit to NT$398.27 billion, driven by strong demand for artificial intelligence (AI) chips and advanced processors for clients like NVIDIA and Apple. The company's net income for the June quarter was significantly higher than estimates, with revenues reaching NT$933.80 billion, up 38.7% YoY [1].

TSMC's high-performance computing division, which includes AI and 5G applications, accounted for 60% of the second-quarter revenues. Strong demand for TSMC's 3nm and 5nm node semiconductor chips also contributed to revenue growth. The company projects third-quarter revenues between $31.8 billion and $33.0 billion, up 38% YoY, and expects a 30% surge in revenues for 2025 [1].

TSMC's dominance in the semiconductor industry, significant pricing power, and plans to expand manufacturing plants in Japan, Germany, and the United States make it a compelling buy. The company controls nearly 67% of semiconductor manufacturing, giving it a leading position in the sector [1]. TSMC's first-mover advantage with the third-party foundry model and its status as a key supplier to major players such as NVIDIA, AMD, and Broadcom further solidify its market position [1].

However, TSMC faces headwinds from U.S. trade policies, tariffs, and export controls. The company has warned that tariffs could lead to slightly higher prices, which may reduce demand. Additionally, the Taiwan dollar's appreciation against the greenback has shaved more than 3 percentage points off TSMC's gross margin [2]. Despite these challenges, TSMC remains well-positioned to benefit from the AI revolution, with its cutting-edge technology and market-leading position in advanced nodes [2].

TSMC's Q2 earnings call, scheduled for July 17, will provide further insights into the company's performance and guidance for the third quarter. Investors should focus on TSMC's long-term AI/HPC tailwinds, not short-term fluctuations [2].

References:
[1] https://finance.yahoo.com/news/3-reasons-buy-tsmc-stock-190000067.html
[2] https://www.ainvest.com/news/tsmc-q2-profit-surges-61-strong-ai-chip-demand-2507/