Hits All-Time High! TSMC Q2 Net Profit Surges Nearly 61%, Stock Soars  

For those who’ve been following my articles, you might recall that back in April, when TSMC’s stock was at $150 ahead of its Q1 earnings, I was firmly bullish.

The stock’s steady climb and Q2 results have validated my view. Let’s take a quick look at TSMC’s Q2 earnings today.  

Outstanding Performance  

TSMC’s Q2 revenue exceeded market expectations, growing 38.6% year-over-year to TWD 933.79 billion, with a 11.3% quarter-over-quarter increase.

 

In USD terms, revenue rose 44.4% to $30.07 billion, up 17.8% sequentially, driven by the ramp-up of the 3nm process and explosive HPC demand.  

Net profit growth was even more impressive, reaching TWD 398.27 billion, up 60.7% year-over-year and 10.2% quarter-over-quarter. Diluted EPS was TWD 15.36, or $2.47 per American Depositary Receipt (ADR).  

 

Key profitability metrics remained strong: gross margin at 58.6% (down 0.2 points), operating profit margin at 49.6% (up 1.1 points, aided by lower operating expense ratios), and net profit margin at 42.7%.  

TSMC’s Exceptional Technology  

I love describing TSMC with one phrase: “Anything Intel won’t do, TSMC can.”  

 

Qualcomm and Apple leverage TSMC’s platform to design their own mobile chips exactly as envisioned, without negotiating or compromising with a heavyweight like Intel.  

 

These chips ushered in a new era of mobile communications, propelling TSMC to new heights.  

 

The Q2 report further solidifies TSMC’s leadership in advanced process technology. Advanced 7nm and below processes accounted for 74% of wafer revenue, up from the prior quarter.

 

The cutting-edge 3nm process contributed 24%, 5nm 36%, and 7nm 14% to total wafer revenue, with 3nm and 5nm combined at 60%, reflecting robust demand for the latest chips.  

North American client revenue jumped from 65% last year to 75%, while mainland China’s share dropped from 16% to 9%.  

 

Additionally, HPC business growth was strong, with revenue share at 60% and a 14% sequential increase, fueled by surging AI chip demand.

 

Automotive revenue grew 30% quarter-over-quarter. However, smartphone business softness is notable—up 7% sequentially but down from 33% to 27% of revenue year-over-year, signaling ongoing weakness in traditional consumer electronics.  

Future Outlook: Still Worth Buying?  

In April, I was firmly bullish, arguing TSMC’s $151 stock was undervalued. Now at $238, despite a sustained rally, I believe there’s still upside potential.  

 

Analysts widely expect TSMC to shine in the second half. Kevin Wang, director at Mizuho Securities Asia, said: “There are concerns like tariffs or margin uncertainty, but overall, I think TSMC will outperform the market starting this half. It will continue raising prices for advanced process products—there’s virtually no competition.”  

 

At least six brokerages, including HSBC and Deutsche Bank, raised TSMC’s price targets after last week’s sales data.

 

Morgan Stanley analysts predict TSMC could raise its 2025 revenue growth guidance above 20% due to persistent AI demand outstripping supply.

 

Bloomberg-tracked analysts see an 11% upside from Wednesday’s close for TSMC’s Taiwan stock over the next year.  

 

Morningstar analyst Phelix Lee noted: “The market still favors AI-related stocks.” He added that while forex factors may cut TSMC’s Q2 gross margin by 2-3 points, its market dominance should enable price hikes to offset currency impacts.  

 

In today’s AI-driven surge, we all believe AI will transform the world, so we should also trust TSMC to carve out a share of this pie with its stellar technology.