Tech Stocks Rise Amid TSMC's Record Profit and Earnings Guidance

Taiwan Semiconductor Manufacturing Company (TSMC) reported record quarterly profit of $13.5 billion, beating forecasts, driven by strong AI chip demand. The company raised its Q3 revenue outlook to $31.8-33 billion. Asian stock markets rose, while European shares rebounded after a four-day slide, led by ABB. US stock futures were muted as TSMC results failed to lift the cautious mood.

Title: TSMC Reports Record Quarterly Profit Amid Strong AI Chip Demand

Taiwan Semiconductor Manufacturing Company (TSMC) reported a record quarterly profit of $13.5 billion, surpassing forecasts, driven by robust demand for artificial intelligence (AI) chips. The company's net revenue for the second quarter rose 38.65% year-over-year (YoY) to NT$933.80 billion, or approximately $31.7 billion, according to the company's earnings report [1]. This significant growth was primarily fueled by strong demand for advanced AI processors, with advanced chips (7nm and below) accounting for 74% of TSMC's total wafer revenue [1].

TSMC's shares were up nearly 6% at 2:25 a.m. ET on trading platform Robinhood, reflecting investor optimism about the company's performance [1]. The company's strong financials were driven by the megatrend towards AI, with leading clients such as Nvidia and Apple benefiting from TSMC's advanced manufacturing capabilities [1].

However, TSMC faces potential headwinds, including trade policies and tariffs imposed by the U.S. President Donald Trump, which could impact the company's operations and revenue growth. The company has warned that tariffs could lead to slightly higher prices, potentially reducing demand [2]. Additionally, the appreciation of the Taiwan dollar has shaved more than 3 percentage points off TSMC's gross margin, further impacting its profitability [2].

Despite these challenges, TSMC remains well-positioned to benefit from the AI revolution. The company's cutting-edge technology and market-leading position in advanced nodes provide a significant competitive advantage. TSMC's ability to scale 3nm capacity, by converting 5nm fabrication tools, ensures it can meet demand without compromising margins long-term [3].

Looking ahead, TSMC has raised its Q3 revenue outlook to $31.8-33 billion, a 38% increase from a year earlier, and up 8% on the previous quarter at the midpoint of its guidance [1]. This positive outlook suggests that TSMC is poised to continue its strong performance in the coming quarters.

In summary, TSMC's record quarterly profit is a testament to the company's success in meeting the growing demand for AI chips. However, the company must navigate potential headwinds from trade policies and currency exchange rates to maintain its momentum. Investors should focus on TSMC's long-term AI/HPC tailwinds, not short-term fluctuations.

References:
[1] https://www.cnbc.com/2025/07/17/tsmcs-second-quarter-profit-soars-nearly-61percent-as-ai-chip-demand-stays-strong-.html
[2] https://www.ainvest.com/news/tsmc-q2-profit-surges-61-strong-ai-chip-demand-2507/
[3] https://www.investors.com/news/technology/tsmc-stock-taiwan-semiconductor-q2-2025-earnings/