TSMC's Next Move Could Create Trillions in ValueTaiwan Semiconductor Manufacturing Co., Ltd.TWSE_DLY:2330moonyptoTSMC delivered another standout quarter, showing that AI demand is still accelerating Q2 revenue jumped 34% year over year to $40.2 billion, beating expectations by about $900 million, while EPS per ADR climbed 74% to $4.31, topping estimates by $0.37. Profitability remained exceptional, with gross margin at 68%, operating margin at 60%, and net margin at 56%. This also marked the company's fifth consecutive record quarter Even so, after the stock's nearly 40% rally this year, investors appeared to lock in profits following the results CEO C.C. Wei said the company remains highly confident in the long term AI growth story. Advanced chips built on 7nm and smaller processes now account for 77% of wafer revenue, with 3nm contributing 30% and 2nm beginning to ramp as production expands later this year. Wei also pointed to agentic AI as a new source of demand, helping boost CPU orders alongside AI accelerators. At the same time, demand for older manufacturing nodes weakened, suggesting rising memory costs may be weighing on mainstream semiconductor markets TSMC also doubled down on its expansion plans. The company increased its total US investment commitment to $265 billion, which will fund 12 advanced chipmaking and packaging facilities in Arizona. It also raised its fiscal 2026 capital spending forecast to $60 billion to $64 billion, up from the previous $52 billion to $56 billion range. CFO Wendell Huang added that spending over the next three years will be much higher than the previous three, with most of next year's budget focused on advanced manufacturing technologies Looking ahead, TSMC lifted its 2026 revenue growth forecast to slightly above 40% in US dollar terms, marking its second guidance increase this year and coming in well above Wall Street expectations. When asked about competition from Samsung and Intel, Wei argued that foundry relationships are built over many years and customers are unlikely to switch suppliers over pricing alone. The biggest challenge now is execution. Massive investments, overseas factory expansion, and the rollout of 2nm production will all put pressure on costs. If TSMC can keep gross margins near current levels while scaling production, it will reinforce its leadership as the AI investment cycle continues over the next several years.