TSMC 2Q26 revenue reached the high end of guidance; Bernstein maintains Outperform

Overview

This report is Bernstein's earnings review of Taiwan Semiconductor Manufacturing Co Ltd. The core message is that TSMC's 2Q26 revenue reached the high end of company guidance and came in slightly above market consensus expectations. Although Samsung Foundry and Intel Foundry are showing signs of improved customer traction due to tight advanced-node capacity at TSMC, the report believes TSMC remains ahead in technology generation, execution track record, and scale, and does not expect these competitive dynamics to negatively affect TSMC's revenue in the near term.

Core views

Bernstein maintains its Outperform view on TSMC. The main reasons include: 2Q26 revenue of NT$1.27T reached the high end of guidance and was about 0.5% above consensus; leading-edge capacity remains in short supply; CoWoS capacity continues to expand; 2026 gross margin is expected to rise to 65%; and strong revenue growth together with margin improvement is expected to drive approximately 50% year-over-year EPS growth in 2026. On valuation, the report states that the stock is currently trading at 21.4x forward P/E, and the NT$2,780 target price is based on a target P/E of 20x.

Analysis framework

The report supports its investment view through revenue tracking, comparisons of guidance versus market consensus expectations, verification of FX impacts, capex and capacity forecasts, gross margin and EPS projections, and relative competitive landscape analysis. The valuation framework primarily uses a target P/E multiple, and the target price for TSM.US is derived from the 2330.TT target price via FX conversion.

Methodology notes

• Valuation methodstarget_p_e_multiple

  Target P/E valuation

  Based on estimated Q5-Q8 EPS of NT$139, the report applies a target P/E of 20x to derive a 12-month target price of NT$2,780 for 2330.TT, and then converts it by exchange rate to a target price of US$430 for TSM.US.

• earnings_reviewrevenue_vs_guidance_and_consensus

  Comparison of revenue versus guidance and consensus

  The report compares 2Q26 revenue of NT$1.27T with company guidance and market consensus expectations, concluding that revenue reached the high end of guidance and was about 0.5% above consensus, with FX having no impact on that conclusion.

• industry_analysiscapacity_and_competition_check

  Capacity supply-demand and foundry competitive landscape

  The report observes improved customer traction at Samsung Foundry and Intel Foundry, but believes that tight advanced-node capacity at TSMC means demand still significantly exceeds available supply, and that TSMC remains ahead in technology, execution history, and scale.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 2330.TT

  Primary listed stock, directly covered by the report

  Strengths

  Revenue reached the high end of guidance, advanced-node capacity is tight, CoWoS capacity is expanding, and gross margin and EPS forecasts are strong.

  Weaknesses

  Current valuation is already in a relatively high forward P/E range and is sensitive to earnings delivery and market multiples.

  Comparison

  Compared with Samsung Foundry and Intel Foundry, the report believes TSMC is at least one generation ahead and has a better execution track record and larger scale.

  Risks

  Compression in overall market valuation multiples, Intel regaining and maintaining technological leadership, and geopolitical uncertainty.

• TSM

  TSMC ADR/secondary ticker; target price is converted from the primary listing target price via FX

  Strengths

  Shares TSMC's fundamentals with 2330.TT and benefits from advanced-node and AI-related manufacturing demand.

  Weaknesses

  The target price is affected by the primary listing target price and FX conversion.

  Comparison

  The report does not provide a separate analysis of ADR fundamental differences independent of 2330.TT.

  Risks

  Also faces risks from valuation multiples, competitors catching up technologically, and geopolitics.

Key data

• June revenueNT$443BUp 6% month over month and 68% year over year.
• 2Q26 revenueNT$1.27TUp 12% quarter over quarter and 36% year over year, reaching the high end of guidance and about 0.5% above market consensus expectations.
• RatingOutperformBernstein's investment rating on TSMC.
• Target price2330.TT: NT$2,780.00; TSM: US$430.00The target price for TSM.US is derived from the primary listing target price via FX conversion.
• Closing price and upsideTWD 2,440.00; 14%The closing date is 2026-07-13 and applies to 2330.TT.
• Capex forecast2026: US$56bn; 2027: US$68bnBernstein's forecast for TSMC's future capital expenditures.
• CoWoS capacity forecast135k WPM by end-2026; 195k WPM by end-2027The report expects TSMC's CoWoS capacity to continue expanding and also mentions other supply sources.
• 2026 gross margin forecast65%Above the previous year's 60%.
• 2026 EPS forecastNT$102The report expects about 50% year-over-year growth.
• Current valuation21.4x forward P/EThe report says the stock is currently trading at 21.4x forward P/E.

Impact & implications

The report's investment implication for TSMC is positive: revenue performance reinforces the resilience of advanced-node demand, capacity bottlenecks support pricing and utilization, and CoWoS expansion plus AI-related demand should continue to support growth through 2026 to 2027. Customer progress at Samsung Foundry and Intel Foundry warrants monitoring on the competitive side, but the report believes near-term revenue risk is limited because TSMC remains supply-constrained and demand far exceeds available capacity.

Risks

• Compression in overall market valuation multiples.
• Intel regaining and maintaining technological leadership.
• Geopolitical uncertainty.
• Samsung Foundry and Intel Foundry are gaining more customer traction due to TSMC's tight capacity, and it remains to be seen whether this changes the long-term competitive landscape.

What to watch

• TSMC's upcoming earnings call, scheduled for Thursday at 2 p.m. Taipei time and 6 a.m. UTC.
• Capacity expansion plans, especially the pace of advanced-node and CoWoS capacity additions.
• Gross margin outlook, especially whether it can reach 65% in 2026.
• N2 ramp-up progress.
• Samsung Foundry's 4/5nm and 8nm price increases and progress on 2nm AI chip projects.
• Potential progress in Intel Foundry's cooperation related to Google TPU.