TSMC’s 2Q26 revenue hits the high end of guidance, gross profit margin is expected to exceed expectations, and supply and demand imbalance continues to be positive (J.P. Morgan)

Street Signal | TSMC’s 2Q26 revenue hits the high end of guidance, gross profit margin is expected to exceed expectations, and supply and demand imbalance continues to be positive (J.P. Morgan)

The J.P. Morgan report confirmed that TSMC’s 2Q26 sales reached the high end of guidance, and gross profit margin is expected to exceed the upper limit of guidance. The growth drivers come from data center AI demand and N3/N5 capacity utilization exceeding 100%.

The imbalance between supply and demand in the next few years will keep gross profit margin above 67%, and the company plans to increase prices for advanced processes by 8-10% in 2027. One-sentence conclusion: TSMC is enjoying unprecedented bargaining power and profit margins brought about by AI demand.

Its pricing power far exceeds market expectations and its growth certainty is extremely strong. Positive/negative: Positive for TSMC (2330.TW). The excellent performance in 2Q26 and future price increase plans have not yet been fully reflected by the current stock price, and there is still room for growth.

Catalysts: 1) 2Q26 Fashuohui management’s specific outlook; 2) visibility of AI-related orders; 3) specific implementation details of the 2027 price increase plan.