Taiwan Semiconductor Earnings: Can the World’s Top Foundry Keep Delivering?

Restarting Three Mile Island shows fear of reactors is subsiding

• Taiwan Semiconductor, the world’s leader in AI chip production, reports earnings before the market opens tomorrow.
• The company is integral to the supply chain feeding Nvidia and other firms. 
• Its qusrterly report has the potential to move the entire AI sector. 

Taiwan Semiconductor (TSM), one of the biggest sleeping giants in the market and the ninth largest company in the world, is scheduled to report quarterly earnings tomorrow. The company’s worth more than Tesla (TSLA) and Berkshire Hathaway (BRK.B), and it’s integral to the production of AI chips for the world’s largest companies but typically doesn’t attract much media coverage. 

Just the same, its earnings call possesses the power to move stock prices for the entire AI sector. Let’s dive into the facts, estimates and variables that could move TSM tomorrow morning. 

AI booms, but TSM struggles to keep pace

TSM is down nearly 15% so far in 2025, underperforming the broader chip sector despite continued enthusiasm for AI. Despite the slide, the company’s leadership in advanced node chip production means it remains an integral part of the supply chain for companies like Nvidia (NVDA), Apple (AAPL), Advanced Micro Devices (AMD) and other AI giants. 

While demand for AI remains strong, broader chip demand has actually weakened, especially in smartphones and personal computers. TSM has heavy exposure to both of these revenue segments, so softening demand is a bearish factor. Investors and analysts will be watching closely to see if AI-related strength is enough to offset the softening demand in their legacy chip business. 

Margins, orders and outlook: Watchpoints ahead of the call

Consensus analyst estimates for TSM’s Q2 earnings call predict revenue of $30.21 billion and an earnings per share (EPS) of $2.38. Gross margins are expected to be around 53%, a slight decrease from last quarter because pricing pressure persists for older node chips. 

Factors outside of revenue and EPS that could also move TSM. Most notable among them are revisions to full-year CapEx guidance (previously guided $28 billion to $32 billion), advanced node utilization (especially N3/N5 capacity), commentary on US fabrication infrastructure development, updates on the company’s Japanese expansion, and Apple’s seasonal chip orders ahead of the iPhone 17 launch in the fall. 

Long-term promise vs. short-term pressure

Despite strong fundamentals, TSM has struggled in the market because of macroeconomic softness in consumer tech spending, rising costs related to fabrication expansions in the US and Japan, and the lingering geopolitical risk of being based in Taiwan.

Those bullish on TSM validate those feelings with TSM’s long-term AI infrastructure growth, its near-monopoly on bleeding-edge chip manufacturing and the diversification of its global fabrication network, which increases their geopolitical resiliency. 

Those bearish on TSM note the company’s slower-than-expected recovery in smartphones and PCs, its shrinking margins because of pressure from CapEx and competition at older nodes, and a valuation sitting at 23x forward earnings, which is elevated compared to historical averages. 

Taiwan Semiconductor certainly isn’t going anywhere anytime soon; major Magnificent Seven companies would take a major blow if it did. However, as it pertains to TSM stock price, there’s no shortage of bullish and bearish factors to look out for in the earnings call tomorrow. Which factors will win out is anyone’s guess. 

Gus Downing is host of the tastylive Network show Risk and Reward. @GainsByGus

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