TSMC's earnings report exceeded expectations, with AI demand being the biggest driver. The options market predicted this in advance.
1. Options Market Bets on Earnings Report Favorably
On July 16, Eastern Time, the options market for $Taiwan Semiconductor(TSM.US) showed a clear bullish bias, with options traders increasing their bullish bets. Data shows that the cost of hedging against a decline in TSMC's stock price has fallen to its lowest level since January.
Total trading volume for the day reached 210,800 contracts, with call options accounting for 52.52% and put options for 47.48%. Open interest totaled approximately 1.7879 million contracts, close to the 30-day trading average.
2. Quick Interpretation of Q2 Earnings
On July 17, Eastern Time, TSMC announced its Q2 earnings. Thanks to strong demand for AI chips, TSMC's Q2 revenue surged 38.6%, and net profit soared 61%, delivering an impressive quarterly report.
TSMC's latest earnings report shows:
Revenue: Revenue reached NT$933.79 billion, a significant increase of 38.6% year-over-year.
Net Profit: Net profit reached NT$398.3 billion, up 10.2% quarter-over-quarter and 60.7% year-over-year, far exceeding market expectations of NT$376.42 billion.
Earnings Per Share (EPS): Diluted EPS was NT$15.36, up 60.7% year-over-year, in line with net profit growth.
Profitability: Significantly improved, with all margin metrics showing clear upward trends.
Watch Here:TSMC (TSM.US) 2025 Q2 Earnings Conference Call
3. Investment Outlook and Risk Warnings
1) AI Demand as the Core Growth Driver
TSMC's strong performance is primarily driven by robust demand for AI chips:
Utilization rates for advanced processes below 7nm remain high, with revenue share rising to 74%.
High-performance computing (HPC) contributed 60% of revenue, with major clients like $NVIDIA(NVDA.US) and $AMD(AMD.US) continuing to place additional orders.
Mizuho Securities Director Kevin Wang noted: "TSMC faces almost no substantive competition in advanced processes, giving it unique pricing power."
Related stocks and ETFs: $ASML(ASML.US), $Applied Materials(AMAT.US), $Direxion Semicon Bull 3X(SOXL.US), $Leverage Shares 2X Long TSM Daily ETF(TSMG.US), $Direxion Daily TSM Bull 2X Shares(TSMX.US), $GraniteShares 2x Long TSM Daily ETF(TSMU.US), $YieldMax TSM Option Inc Strat ETF(TSMY.US).
2) Risk Factors to Monitor
Despite optimistic market sentiment, investors should remain cautious of potential risks:
Currency Fluctuations: A stronger New Taiwan Dollar could impact gross margins.
Geopolitics: The U.S. CHIPS Act may increase costs for overseas manufacturing.
Related stocks and ETFs: $Direxion Semicon Bear 3X(SOXS.US), $Direxion Daily TSM Bear 1X Shares(TSMZ.US).
The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.
