Few companies have a clearer view of where the AI boom is heading than TSMC. And of course, with that, investors increasingly look to the company for answers.Earlier in June, speaking at the company’s annual shareholders’ meeting in Hsinchu, Taiwan, CEO C.C. Wei was precise and notably candid.It will be a long time before we can meet customer demand.Wei said this, according to a Bloomberg report, while reiterating a forecast of more than 30% annual sales growth for 2026. The gap between those two statements, extraordinary growth already baked in and demand still exceeding what the company can produce, is the most important thing investors need to understand about TSMC heading into its July 16 second-quarter earnings report.Taiwan Semiconductor Manufacturing (TSM) trades at $418.93 as of this reporting. Stock is also up 40.35% year to date, according to Yahoo Finance. A fifth consecutive quarter of record earnings is widely and highly expected. The question is by how much.Also Read: Taiwan Semiconductor Manufacturing Company Ltd Latest News and StoriesWhat TSMC’s June revenue data is already telling usBefore the earnings report arrives, the monthly revenue data has already provided a meaningful preview, and what it shows is unusually constructive.TSMC’s June revenue jumped 68% year over year, according to TSMC’s report. That is the fastest monthly revenue growth the company has reported all year, well above the 45% year-over-year increase in March, TSMC reports.The sequential behavior even makes it more notable. June revenue grew 6.2% from May. TheStreet’s previous report shows TSMC’s June revenue has declined sequentially from May in each of the past four years. This year broke that pattern. Yes, quite impressive.More TSMC: TSMC’s June revenue jump breaks a four-year seasonal patternThe whole chip trade is waiting on one reportGoldman Sachs turns its back on major semiconductor stockThe shift matters because it signals that demand is not following seasonal norms. AI infrastructure spending is running hot enough to override what has historically been a slower summer month for the world’s largest contract chipmaker.The Zacks consensus estimate for Q2 EPS is at $3.77 per share, up 52.6% year over year. Revenue consensus sits at approximately $39.8 billion, representing 32.2% year-over-year growth.TSMC’s own Q2 guidance called for revenue between $39.0 billion and $40.2 billion, with gross margins of 65.5% to 67.5% and operating margins of 56.5% to 58.5%.Given the June revenue momentum, we have a credible case for TSMC beating both the consensus and its own midpoint guidance.Q1 2026 results set the foundation already, and the bar is already highThe Q1 2026 results provide the earnings baseline that the Q2 report needs to build on, according to TSMC’s earnings release.Revenue was $35.90 billion in U.S. dollar terms, up 40.6% year over year and 6.4% from Q4 2025. Net income increased 58.3% year over year. Gross margin was 66.2%, operating margin was 58.1%, and net profit margin was 50.5%. Advanced technologies, defined as 7-nanometer and more advanced, accounted for 74% of total wafer revenue, with 3-nanometer chips alone representing 25%.The trailing 12-month revenue through March 2026 reached $131.7 billion, up 38.8% year over year, according to Macrotrends data.For full-year 2025, revenue was $121.4 billion, up 37.6% from 2024. The sequential growth rate has not slowed. If anything, the June data suggests it is accelerating.
The TSMC semiconductor market will reach $1.5 trillion by 2030.Annabelle Chih/Bloomberg via Getty Images
What Wei is actually saying and why it matters beyond TSMCLooking at comments from the C.C. Wei’s shareholders’ meeting, my read is that he is simultaneously delivering good news and a warning. The market has not fully absorbed either.The good news is embedded in the supply constraint itself. When a company cannot meet demand, even with such a growing revenue of 40% year over year, pricing power becomes structural rather than negotiable. In an earlier coverage, TheStreet pointed out that the TSMC semiconductor market will reach $1.5 trillion by 2030. Wei addressed the pricing question directly when asked whether TSMC could raise prices. Related: TSMC executive drops blunt message on AI chip’s next frontier”I’d like to do that. We still need to make money,” he said, according to a Seeking Alpha report. But he drew a specific contrast with memory companies, noting TSMC is “focused on long-term, sustainable operations” and not interested in sudden price spikes.That framing itself is telling. TSMC is deliberately leaving pricing upside on the table to protect long-term customer relationships with Nvidia, AMD, Apple, and Broadcom. The constraint on margins is not competitive pressure. It is a strategic restraint.Then the warning is about the industry timeline. Even with TSMC’s Arizona fabs expanding, even with the U.S. government subsidizing domestic semiconductor capacity, the supply of advanced AI chips will not catch up to demand for years. “It will be a long time before we can meet customer demand,” Wei said, according to reports from the shareholders’ meeting.What we need TSMC to show for the bull case to holdThe setup heading into July 16 is constructive but carries elevated expectations built in. Yahoo Finance data shows TSMC is up 84.95% over the past year, and the consensus already models 52.6% EPS growth.What would move the stock after earnings? Revenue at or above the $40 billion upper end of TSMC’s guidance range, gross margin above 67%, and Q3 guidance that implies continued acceleration rather than deceleration.Related: TSMC predicts semiconductor market will reach $1.5 trillion by 2030What would disappoint? Any guidance commentary suggesting the Broadcom-related demand softness that briefly affected TSMC’s Taipei shares in early June is spreading. Broadcom’s weaker-than-expected Q3 fiscal 2026 outlook spooked investors and triggered a brief TSMC decline, though the June revenue data strongly suggest that concern was temporary.And remember this: The five-year revenue progression from $70.6 billion in 2023, according to Macrotrends, to what could approach $160 billion by the end of 2026 is one of the most remarkable scaling stories in the history of the semiconductor industry.Related: TSMC CEO sends blunt message to memory chip rivals