Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM) is expected to report second quarter results that come in slightly ahead of expectations, with Wedbush analysts pointing to strong revenue trends and continued demand for advanced semiconductor technologies as potential drivers for a stronger outlook.
Wedbush reiterated its ‘Outperform’ rating ahead of TSMC’s earnings, writing that the company’s monthly revenue figures indicate it likely exceeded the firm’s prior second-quarter top-line estimate by around 1%, similar to the previous quarter’s performance.
The analysts expect gross margins to have at least reached the midpoint of TSMC’s prior guidance range, noting that results appeared to track closely with expectations throughout the quarter.
Looking ahead, Wedbush expects TSMC could provide an improved revenue outlook for the full year. The company previously guided for sales growth of more than 30% in US dollar terms, while revenue growth has been tracking in the high-30% range year-to-date. Wedbush wrote that the ramp of TSMC’s 2-nanometer process technology in the second half of 2026 could support at least mid-30% annual sales growth.
The analysts added that such an outcome could lead to higher 2026 estimates and reduce the magnitude of the slowdown they currently model for 2027.
Wedbush also highlighted gross margins as a key area to monitor, with the firm and consensus forecasts currently expecting some pressure in the second half of the year due to the 2nm launch and expanded overseas manufacturing capacity. The analysts wrote that third-quarter guidance should provide more visibility into how those factors will affect profitability, while recent currency movements could provide some benefit.
Capital spending will also be closely watched, with Wedbush writing that sustained demand for advanced nodes could prompt TSMC to raise its annual capex outlook again. The analysts noted that this would further support the view that current 2027 revenue growth expectations may be too conservative.
Wedbush wrote that TSMC remains one of its preferred hardware investments, citing the company’s position in advanced semiconductor manufacturing and packaging as a key beneficiary of the ongoing AI data center build-out and future edge AI opportunities across areas including optics, robotics, automotive technology and electronic design automation.
Shares of TSMC traded hands at $417 on Wednesday afternoon, having gained more than 37% so far this year.
