<p><strong>Taiwan Semiconductor Manufacturing</strong> <span class="ticker-mention inline-flex items-center font-bold">(TSM <span class="ml-1 text-green-900">+1.09%</span>)</span> stock has clocked respectable gains of 35% so far this year. However, TSMC's gains pale in comparison to the 67% jump in the <strong>PHLX Semiconductor Sector</strong> index.</p>
<p>But that may change after the company releases its second-quarter results on July 16. Let's look at the reasons why TSMC's upcoming results could supercharge this semiconductor stock next week.</p>
<div><img alt="TSMC logo outside company headquarters." width="880" height="528" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Nzc5NDIvdGFpd2FuLXNlbWljb25kdWN0b3ItdHNtYy1idWlsZGluZy13aXRoLXRzbWMtbG9nby1pbi1mcm9udF90c21jLmpwZyZ3PTM4NDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84Nzc5NDIvdGFpd2FuLXNlbWljb25kdWN0b3ItdHNtYy1idWlsZGluZy13aXRoLXRzbWMtbG9nby1pbi1mcm9udF90c21jLmpwZyZ3PTM4NDA"/>
<p>Image source: TSMC.</p>
</div>
<h2>The market is underestimating TSMC's potential</h2>
<p>TSMC is the world's largest semiconductor foundry, with a market share of 73%, according to Counterpoint Research. Foundries manufacture chips that fabless companies, such as <strong>Nvidia</strong>, <strong>Broadcom</strong>, <strong>Advanced Micro Devices</strong>, <strong>Apple</strong>, and others design. TSMC, therefore, plays a crucial role in the global semiconductor ecosystem, manufacturing chips for major customers and for a wide variety of applications.</p>
<section><div><div><div><small><div>Expand</div></small></div><div><img alt="Taiwan Semiconductor Manufacturing Stock Quote" width="64" height="64" src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL1RTTS5wbmcmdz0xMjg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vYXJ0L2NvbXBhbnlsb2dvcy9tYXJrL1RTTS5wbmcmdz0xMjg"/></div><div><h2>NYSE: TSM</h2><div>Taiwan Semiconductor Manufacturing</div></div></div><div><div><div>Today's Change</div><div>(1.09%) $4.70</div><div>Current Price</div><div>$437.27</div></div><div></div></div></div><div><div></div><div><h3>Key Data Points</h3><div><div>Market Cap</div><div><span class="inline-flex items-center gap-1">$2.3T<span class="group/market-cap relative inline-flex shrink-0 align-middle"><span></span><span id="_R_13ab5tminr5uamivb_" class="sr-only">Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.</span><span class="pointer-events-none absolute z-50 mt-1 w-64 rounded-md bg-gray-900 px-3 py-2 text-xs leading-snug whitespace-normal! wrap-break-word normal-case! text-gray-50 opacity-0 shadow-lg transition-opacity group-hover/market-cap:opacity-100 group-focus-within/market-cap:opacity-100 top-full right-0 left-auto translate-x-0">Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.</span></span></span></div><div>Day's Range</div><div>$428.75 - $440.39</div><div>52wk Range</div><div>$223.70 - $479.00</div><div>Volume</div><div>2.2K</div><div>Avg Vol</div><div>14M</div><div>Gross Margin</div><div>60.72%</div><div>Dividend Yield</div><div>0.80%</div></div></div></div></section>
<p>TSMC's position as the largest semiconductor foundry gives it immense pricing power. <em>Tom's Hardware</em> reported last month that it is going to increase the prices of its advanced chipmaking nodes by 5% to 10%. The report added that TSMC has already started rolling out the price hikes. What's worth noting is that TSMC wasn't looking to hike the price of its advanced process nodes just a month ago, but it seems the overwhelming demand for its chips eventually led to such a step.</p><div><div id="foolcom_sidebar_top_mobile_container"><div><div><div></div><div></div><div></div></div></div><div></div></div></div>
<p>After all, TSMC's advanced nodes, which are 7-nanometer (nm) and smaller, are used to make artificial intelligence (AI) chips for data centers, smartphones, and personal computers (PCs). AI accelerators, such as graphics processing units (GPUs) and custom chips, are in terrific demand. The company notes that its AI accelerator revenue will increase at a compound annual growth rate (CAGR) in the high 50% range through 2029.</p><div></div>
<p>Given that TSMC expects the tight supply situation to persist due to rapidly growing semiconductor demand, it won't be surprising to see further price hikes from the foundry giant. TSMC recently pointed out that the global semiconductor industry's revenue could reach $1.5 trillion in 2030, up 50% from its earlier forecast.</p><div><div id="in_line_article_pitch_container"><div><div><div><div></div></div><div><div></div><div></div><div></div></div></div></div><div></div></div></div>
<p>The company has been accelerating the build-out of advanced fabs to serve the high-performance computing (HPC) and smartphone markets. These advanced nodes command higher prices due to the better performance and efficiency they offer, suggesting they can drive a stronger increase in TSMC's revenue and earnings.</p>
<p>So, it won't be surprising to see TSMC's earnings growth outpacing the 49% bottom-line jump that analysts are expecting in 2026.</p>
<h2>Why the stock could step on the gas after July 16</h2>
<p>We have seen that TSMC can exceed Wall Street's growth expectations due to the terrific semiconductor demand and the company's strong pricing power. As a result, there is a strong likelihood the company's Q2 earnings per share will exceed the $3.83 consensus estimate, which suggests a 55% year-over-year increase in its bottom line.</p>
<p>TSMC's earnings increased nearly 65% year-over-year in Q1, and the reported price hikes could help it match that growth rate in the current quarter. Also, analysts are forecasting TSMC's Q3 earnings to increase by 45% year over year, though the points discussed above indicate it could do better than that. So, TSMC's stronger-than-expected results and guidance could pave the way for more upside in this chip stock in the second half of the year, and in the long run.</p><div id="article_pitch_container"><div><div><div></div><div></div><div></div><div></div><div></div><div></div><div></div></div></div><div></div></div><div id="promobox_container"><div><div><div></div><div></div><div></div><div></div></div></div><div></div></div>

TSMU

TSMX

<p>TSMC stock may surge after its July 16 Q2 earnings release, potentially outperforming the PHLX Semiconductor Sector index. As the dominant foundry with 73% market share, TSMC benefits from strong AI chip demand and recent 5-10% price hikes on advanced nodes. Analysts expect Q2 EPS to exceed $3.83, driven by robust pricing power and supply constraints, suggesting significant upside for the semiconductor giant.</p>

- Taiwan Semiconductor Manufacturing Company (TSMC) has gained 35% this year, but still lags behind the 67% rise of the PHLX Semiconductor Sector index.  
- The company is expected to report strong second-quarter results on July 16, with analysts forecasting a 55% year-over-year earnings increase, potentially surpassing the consensus estimate of $3.83 per share.  
- TSMC's significant pricing power and growing demand for advanced chips indicate a likelihood of continued revenue growth, which could enhance the stock's performance in the upcoming months.

Prediction: TSMC Stock Is Going to Soar After July 16