TSMC Surges 4.3% Amid AI Demand Surge and Strategic Shifts – What’s Fueling This Rally?

Summary
• TSMC reports Q2 earnings beat of $0.09/share, revenue of $30.07B tops forecasts by $780M
• Stock hits 52-week high of $248.27, surging 4.3% intraday to $247.8
• CEO C.C. Wei reaffirms 30%+ 2025 revenue growth, signaling AI-driven demand resilience

At 4.3% intraday gains, TSMC’s rally reflects a confluence of Q2 outperformance, AI infrastructure tailwinds, and renewed access to China’s AI market. With 60% of revenue now tied to high-performance computing and $38.4B in capex planned for 2025, the stock’s breakout from a cup-with-handle pattern suggests sustained momentum. Traders are now parsing options liquidity and technical levels to gauge next steps.

Q2 Earnings Beat and AI Demand Ignite TSMC's 4.3% Rally
TSMC’s 4.3% surge stems from a landmark Q2 earnings report where it outperformed both revenue and EPS estimates, driven by 60.7% YoY net income growth and 38.6% sales increase. The company raised its 2025 revenue guidance to $32.4B (midpoint), surpassing Wall Street’s $30.7B target, signaling robust demand from AI partners like Nvidia and hyperscalers. CEO C.C. Wei emphasized unflinching client demand despite Trump-era tariffs and currency headwinds, while the resumption of Nvidia’s AI chip sales to China added a critical catalyst. This performance, coupled with a 53% long-term gross margin target and $11.6B in Chips Act funding, has reignited the AI trade narrative.

Semiconductor Sector Gains Momentum as AI Infrastructure Spending Rises
The semiconductor sector has seen mixed performance, with Samsung and SK Hynix underperforming due to AI integration challenges, while TSMC leads with 60% of revenue from high-performance computing. Intel’s 0.39% intraday gain highlights sector divergence, as TSMC’s AI-driven capex and strategic partnerships with Nvidia and Apple position it as the clear beneficiary of global infrastructure spending. U.S. and China policy shifts, including resumed AI chip exports and Chips Act funding, further underpin the sector’s relevance.

Options and Technicals Signal Aggressive Bullish Setup – Top Picks for July 25 Expiry
• MACD: 8.00 (above signal line 8.30), RSI: 66.80 (neutral), Bollinger Bands: Price at 242.60 (upper), 200D MA: 193.08 (well below).
• Key Levels: 248.27 (52W high), 241.4 (intraday low), 219.96 (30D MA).

TSMC’s short-term bullish trend aligns with a breakout above 248.27, with RSI and MACD suggesting momentum remains intact. Two options stand out for July 25 expiry:

• TSM20250725C247.5 (Call): Strike $247.5, Delta 0.524, IV 29.85%, Leverage 51.08%, Theta -0.7147, Gamma 0.034277, Turnover $2.22M. Delta indicates moderate sensitivity to price, IV in mid-range, and high gamma/theta suggest strong short-term responsiveness. Payoff at 5% upside (260.19): $12.69.
• TSM20250725C250 (Call): Strike $250, Delta 0.438, IV 29.44%, Leverage 68.25%, Theta -0.6352, Gamma 0.0344, Turnover $2.87M. High leverage and liquidity make this ideal for aggressive bulls. Payoff at 5% upside: $10.19.

Action: Aggressive bulls may consider TSM20250725C250 into a bounce above 248.27, while TSM20250725C247.5 offers balanced risk/reward for continued AI-driven momentum.

Backtest TSMC Stock Performance
Taiwan Semiconductor Manufacturing (TSM) has historically shown positive short-to-medium-term performance following a 4% intraday surge. The backtest data reveals that the 3-day win rate is 52.26%, the 10-day win rate is 50.81%, and the 30-day win rate is 51.94%, indicating a higher probability of positive returns in the immediate aftermath of such an event. The maximum return observed was 0.29% over 30 days, suggesting that while the gains may not be substantial, they can still lead to favorable outcomes.

TSMC’s Bullish Momentum Unlikely to Slow – Position for AI-Driven Growth
TSMC’s rally is underpinned by structural AI demand, a resilient margin outlook, and strategic capex, making the 4.3% move a precursor to higher highs. With 248.27 now a key support-turned-resistance, investors should monitor the 241.4 intraday low for pullback opportunities. Intel’s 0.39% gain underscores sector divergence, but TSMC’s 60% HPC exposure and $38.4B capex justify its outperformance. Watch for 248.27 breakouts and consider TSM20250725C250 for leveraged exposure.