TSMC Stock Eyes Fresh Record As Chip Foundry’s Q2 Results, Guidance Exceed Estimates On AI Demand Surge

The processor node technologies, designated as advanced, accounted for 74% of the total wafer revenue in the second quarter.

Chip foundry Taiwan Semiconductor Manufacturing Co.’s (TSM) shares trended on Stocktwits following its quarterly earnings release

Reacting to the earnings, U.S.-listed TSM stock rallied over 6% in overnight trading.

Hsinchu, Taiwan-based TSM reported earnings per share (EPS) of NT$15.36 ($2.47 per ADR) for the second quarter of the fiscal year 2025. This marked a 60.7% year-over-year (YoY) increase and a 10.2% sequential climb.

Net revenue also surged by over 44% YoY and nearly 18% from the previous quarter to $30.07 billion, exceeding the $28.4 billion to $29.2 billion guidance range provided by the company in April. In Taiwanese dollar terms, the growth is 39% and 11%, respectively.

TSMC’s advanced processors are in demand for AI applications and processes that have seen a surge since early 2023. 

Among end markets, the high-performance computing (HPC) segment contributed 60% of the total revenue, smartphones 27%, and IoT and automotive 5% each. The fastest sequential growth (30%) was observed in Digital Consumer Electronics (DCE), which accounted for only 1% of the total revenue.

HPC and IoT grew 14% each, and smartphones a more modest 7%.

Gross margin rose 5.4 points YoY but edged down 0.2 points quarter-over-quarter (Q-o-Q) to 58.6%, aligning with the 57%-59% guidance.

Operating and net margins for the quarter were at 49.6% and 42.7%, respectively.

TSMC said shipments of its 3-nanometer (nm) chips accounted for 24% of the total wafer revenue, while the contributions from the 5-nm and 7-nm processes were 36% and 14%, respectively.

These processor node technologies, designated as advanced, accounted for 74% of the total wafer revenue.

Second-quarter total capital expenditures (capex) were $9.63 billion.

Wendell Huang, Senior VP and Chief Financial Officer of TSMC, said, "Our business in the second quarter was supported by continued robust AI and HPC-related demand."

Looking ahead, the company guided to third-quarter net revenue of $31.8 billion to $33 billion versus the Koyfin-compiled $31.84-billion consensus estimate. Gross and operating margins are seen at 55.5%-57.5%, and 45.5%-47.5%, respectively.

Huang said, "Moving into [the] third quarter 2025, we expect our business to be supported by strong demand for our leading-edge process technologies.”

On Stocktwits, sentiment toward TSMC stock was ‘extremely bullish’ (91/100) by early Thursday, with the degree of optimism improving from a day ago.

The message volume perked up to an ‘extremely high’ level.

Retail traders were rooting for a rally to $250. The stock ended Wednesday’s session up 0.26% at $237.56.

A user predicted TSMC’s positive earnings to catalyze an across-the-board rally for semiconductor and AI stocks.

TSM stock has gained about 21% year-to-date, outperforming the SPY ETF’s 7% gain and the QQQ ETF’s 9% rally.  For the same period, the SOXX ETF, which tracks the Philadelphia Semiconductor Index, has added 14%.

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