A Market That Can’t Even Be Satisfied by Record Results That’s…

A Market That Can’t Even Be Satisfied by Record Results

That’s exactly what happened to TSMC $TSM today, and it’s the best illustration of where the AI rally currently stands.

TSMC: Numbers That Would Normally Smash Records

Second‑quarter revenue hit $40.2 billion, beating the upper end of its own guidance and analyst estimates. In Taiwanese dollars that’s 36 % year‑on‑year growth, and earnings per share came in at $4.31.

Management also sharpened its outlook. It now expects full‑year 2026 revenue growth of over 40 % in dollar terms, up from the previous estimate of over 30 %. Capex was raised to $60–64 billion, and CEO C.C. Wei announced an additional $100 billion investment to expand capacity in Arizona.

So why is the stock falling? The market is worried about two things.

First, the higher chip prices TSMC flagged, and margin pressure next quarter from the costly US expansion.

Second, there’s broader nervousness about the pay‑off of the entire AI boom. When perfection is priced in, a record quarter is just “job done”.

That’s a warning, by the way, for companies and stocks like $NVDA or $ASML, because TSMC is the barometer of the whole chain.

Earnings Season Is Otherwise Going Well

UnitedHealth $UNH beat second‑quarter estimates and the stock added more than 4.5 %. Shares of the company topped $440 for the first time since its massive 2025 sell‑off.

GE Aerospace $GE also beat expectations, yet the stock fell about 4 % – further proof that a beat alone isn’t enough this year. After the close, Netflix $NFLX reports, which will be the first big test of sentiment outside of chips.

Oil and Hormuz: The Second Front

The US carried out another wave of air strikes on Iran on Wednesday, and according to the Wall Street Journal, Trump has been briefed on options to expand the conflict, including deploying ground forces. WTI is trading above $80 a barrel after rising more than 11 % in three sessions; Brent is holding just below $85. Traffic through the Strait of Hormuz, meanwhile, has plunged to a handful of ships a day, compared with the usual 18–22 passages. A fifth of the world’s oil used to flow through here without a hitch – today it’s the number‑one risk factor for both inflation and the Fed. Yet inflation has fallen 0.4 % over the last period.

What to Make of It

The fundamentals of the AI story remain exceptionally strong, and TSMC confirmed that in black and white today. The problem is expectations, which are stretched so tight that even a record triggers a sell‑off. So in the short term, the market is hypersensitive, and on top of that there’s a geopolitical premium baked into the oil price.

Which results will you be watching closely?

"So why are the shares falling? The market is afraid of two things.

First, higher chip prices that TSMC has signaled, and pressure on margins in the next quarter due to costly expansion in the US.

Second, there is broader nervousness about the return on investment of the entire AI boom. When perfection is priced in, a record quarter is just a "mission accomplished".

I don't understand what of that has a negative impact on TSMC?

TSMC has the same yield in the US as in Taiwan, sells chips for more money due to higher costs and delivery speed, also because tariffs are not included there.

TSMC doesn't need to care that much about ROI on AI, just as shovel sellers didn't care if their customer would find gold within a week, month, year, or how much they would sell it for. What mattered was the sentiment and the vision of getting rich.

Hyperscalers most likely have calculated when they want to gain market share and when to scale their LLMs and services for the highest margins.

If TSMC keeps doing what it does best, it won't be short of orders.

Blue chips gain ground as the tech slide deepens