Taiwan Semiconductor Manufacturing Co. (NYSE: TSM; TPE: 2330) posted another month of robust revenue growth in July, with sales climbing 44.7% year-over-year to NT$467.58 billion. The figure also represents a 5.6% sequential increase from June, underscoring the sustained momentum in AI-driven chip demand that has become the cornerstone of the company's recent performance.
The July results come on the heels of a particularly strong June, which saw a 67.9% year-over-year surge, albeit against a lower base. July's growth was measured against a more challenging comparison of NT$323.17 billion in the same month last year, making the absolute sales figure a more telling indicator of underlying demand strength.
TSMC's third-quarter guidance, set at $44.6 billion to $45.8 billion in U.S. dollars, implies that the company needs to achieve a monthly average of between NT$479.81 billion and NT$499.01 billion in August and September combined. This target range is 2.6% to 6.7% higher than July's record, highlighting the high bar set for the remaining months of the quarter.
During the company's July earnings call, CEO C.C. Wei described AI growth as "stronger and stronger and stronger," citing encouraging demand signals from both direct clients and end customers. The revenue breakdown supports this optimism: high-performance computing accounted for 66% of second-quarter revenue, up 20% sequentially, while advanced nodes (7nm and below) contributed 77% of wafer revenue. The newly introduced 2nm process already represents 3% of wafer sales.
The focus on AI has translated into impressive profitability. Second-quarter net profit surged 77% to NT$706.6 billion, comfortably beating the market consensus of NT$632.6 billion. TSMC counts Nvidia Corp. (NASDAQ: NVDA) and Apple Inc. (NASDAQ: AAPL) among its key customers, both of which are major drivers of the AI and premium smartphone segments.
Analyst sentiment remains largely positive. According to FactSet, 44 of 45 recommendations are Buy or Overweight, though one analyst downgraded their rating over the past month. The median price target of $532.50 implies a 26.8% upside from Friday's closing price of $420.04, with targets ranging from $430 to $650.
In the broader market context, Taipei shares closed up 0.42% on Monday, with TSMC's local listing ending at NT$2,380. The company's U.S. ADR edged 0.07% higher to $420.34 ahead of the U.S. open, after gaining 3.43% over the previous five sessions.
Investors will look to supply-chain peers for further confirmation. Foxconn (Hon Hai Precision Industry Co., TPE: 2317) is set to report second-quarter earnings on August 12, with July revenue already up 54.2% to an all-time high of NT$946.5 billion, driven by AI rack shipments.
Key risks to TSMC's trajectory include exchange-rate fluctuations, as the revenue bridge relies on the NT$32 per dollar assumption, as well as potential margin pressure from the N2 ramp-up and overseas fab expansion. The company's next monthly sales update is scheduled for September 10, which will provide a clearer picture of whether the third-quarter guidance is on track.
