TSMC 2Q26 Revenue at the High End of Guidance, Bernstein Maintains Outperform

Overview

This report is Bernstein's earnings review of Taiwan Semiconductor Manufacturing Co Ltd. The key event is TSMC's release of June and 2Q26 revenue: June revenue of NT$443B and 2Q26 revenue of NT$1.27T, which reached the top of company guidance and was slightly above market consensus. The report maintains an Outperform rating and believes that tight advanced-node capacity, CoWoS expansion, margin improvement, and EPS growth together support the investment view.

Core views

Core views in the report include: first, TSMC 2Q26 revenue quality was strong, with high QoQ and YoY growth and about 0.5% above consensus; second, the next market focus will be on capacity expansion, margin outlook, and N2 ramp; third, although Samsung Foundry and Intel Foundry have gained potential customer projects due to TSMC supply constraints, TSMC is at least one generation ahead, has a better production record, and is much larger, so there is no clear near-term revenue pressure; fourth, the NT$2,780 target price is based on a 20x target P/E, and Outperform is maintained.

Analysis framework

The report analyses the company using revenue verification, guidance comparison, consensus comparison, capacity and capex forecasts, margin and EPS forecasts, competitive positioning, and a P/E valuation framework.

Methodology notes

• Relative valuationP/E multiple valuation

  Estimate target price by applying a target P/E multiple to forward EPS.

  Bernstein uses a 20x target P/E and based on forward Q5-Q8 EPS estimates NT$139, derives a 1-year target price of NT$2,780 for 2330.TT; the TSM.US target price is obtained by converting the primary listed target using the exchange rate to US$430.

• Earnings validationRevenue versus guidance and consensus

  Compare disclosed revenue with the company guidance range and market consensus.

  2Q26 revenue was NT$1.27T, reached the top of guidance and was about 0.5% above consensus; the report also checked FX impact and concluded FX does not change this conclusion.

• Capacity and competitive analysisCapacity bottleneck and foundry competition tracking

  Assess demand resilience and competitive impact by evaluating tightness in advanced-node and CoWoS capacity.

  The report tracks customer reallocation toward Samsung Foundry and Intel Foundry, but believes TSMC remains superior on process generation, execution record, and scale, and demand for leading-node capacity continues to exceed available supply significantly.

Asset mapping & comparison

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

• 2330.TT / TSM.US

  Core covered security

  Strengths

  Leading advanced-process position, larger scale, stronger execution track record, CoWoS capacity expansion, and strong 2026 gross margin and EPS growth outlook.

  Weaknesses

  Valuation is already relatively high, with shares trading at 21.4x forward P/E; supply bottlenecks may prompt customers to explore Samsung Foundry and Intel Foundry further.

  Comparison

  Compared with Samsung Foundry and Intel Foundry, the report says TSMC is at least one process generation ahead and has more clearly proven high-volume production records and greater scale.

  Risks

  Compression in broad market valuation multiples, Intel regaining and sustaining a technology edge, and geopolitical uncertainty.

Key data

• June revenueNT$443BUp 6% QoQ and up 68% YoY.
• 2Q26 revenueNT$1.27TUp 12% QoQ and up 36% YoY; reached the top of guidance and about 0.5% above consensus.
• 2026 capex outlookUS$56BBernstein forecast.
• 2027 capex outlookUS$68BBernstein forecast.
• CoWoS capacity outlook135k WPM (end-2026); 195k WPM (end-2027)Reflects advanced packaging expansion expectations.
• 2026 gross margin outlook65%Expected to rise from 60% last year.
• 2026 EPS outlookNT$102Expected to grow by about 50% year-over-year.
• Valuation multiple21.4x forward P/E; target P/E 20xThe report says the shares currently trade at 21.4x forward P/E, while the target price is based on a 20x target P/E.
• 2330.TT close and target priceClose NT$2,440.00; target NT$2,780.00Close date is 2026-07-13; upside is 14%.
• TSM.US target priceUS$430.00Derived by translating the primary listed target price at the exchange rate.
• EPS series2330.TT: F25A NT$66.25, F26E NT$101.62, F27E NT$124.63; TSM: F25A US$10.48, F26E US$16.07, F27E US$19.70EPS data shown in the report table.
• Valuation metricsF26E P/E 24.0x, F27E P/E 19.6x; F26E EV/EBITDA 16.1x, F27E EV/EBITDA 13.0xFrom the report's valuation table.

Impact & implications

For investors, the report reinforces TSMC's earnings leverage in the AI and advanced-node cycle: revenue reaching the top of guidance indicates strong demand, and CoWoS and N2 progress should be key valuation catalysts. Competitors gaining customer attention likely reflect TSMC supply tightness rather than demand leakage; as long as leading-node demand continues to exceed capacity, TSMC revenue and margins should remain supported.

Risks

• Broad market valuation multiple compression.
• Intel regaining and sustaining a technology edge.
• Geopolitical uncertainty.
• If capacity expansion, N2 ramp, or CoWoS expansion falls short of expectations, 2026 revenue and margin outlook could come under pressure.

What to watch

• TSMC's earnings call on Thursday at 2:00 PM Taiwan time, 6:00 AM UTC.
• Capacity expansion plans, especially advanced-node and CoWoS supply.
• Whether gross margin outlook aligns with the forecast to rise to 65% in 2026.
• N2 process ramp progress.
• The actual project execution progress of Samsung Foundry and Intel Foundry with AI-chip customers.
• Whether 2026 and 2027 capex remain on the forecast path of US$56B and US$68B.