TSMC earnings report preview: AI demand continues to be strong, GF Securities expects to raise guidance and increase capital expenditure for 2027

Zhitong
2026.07.08 13:52

Guangfa Securities released a research report, expecting Taiwan Semiconductor to raise its full-year performance guidance and 2027 capital expenditure at the analyst meeting on July 16, 2026. Driven by AI demand, the capacity utilization rate of advanced processes remains high. The institution reiterated a "Buy" rating, raising the target price to NT$2,900 and increasing the EPS forecast for 2026/2027. It is expected that capital expenditures for 2026/2027 will reach $56 billion and $73 billion, respectively

According to the Zhitong Finance APP, global wafer foundry leader Taiwan Semiconductor (TSM.US) will hold its analyst meeting for the second quarter of 2026 on July 16. GF Securities released a research report predicting that Taiwan Semiconductor is expected to raise its full-year performance guidance and simultaneously increase its capital expenditure plan for 2027.

GF Securities analyst Jeff Pu pointed out in the report that AI accelerators and CPUs continue to drive advanced process capacity utilization rates (UTR) to maintain high levels, and the trend of increasing memory capacity on chips, which cannot be reduced through process miniaturization, also provides support. It is noteworthy that Taiwan Semiconductor's capital expenditure acceleration began in 2025, about 1.5 to 2 years after the start of the AI demand cycle, which means that some market share loss or demand overflow is inevitable. Therefore, it is expected that Taiwan Semiconductor may further accelerate capacity expansion at the N5/N3/N2 nodes in the second half of 2027, accompanied by strategic pricing adjustments.

GF Securities reiterated its "Buy" rating on Taiwan Semiconductor and raised its target price from NT$2,808 to NT$2,900. At the same time, the institution raised its earnings per share (EPS) forecasts for Taiwan Semiconductor for 2026 and 2027 by 3% and 12%, respectively.

In terms of specific financial data, Jeff Pu predicts that second-quarter revenue will grow approximately 11% quarter-on-quarter (the company's guidance median is a quarter-on-quarter increase of 10%), with a gross margin of about 68% (the company's guidance range is 65.5%-67.5%, Bloomberg consensus expectation is 67%, and the revised consensus expectation is 69%-70%).

The third-quarter revenue growth rate is expected to be 13% (consensus expectation is 9%), with a gross margin expected to slightly decline to 67.1% (consensus expectation is 65.8%); the full-year guidance may be further upgraded from the current "year-on-year growth of over 30%."

In terms of capital expenditure, GF Securities predicts that Taiwan Semiconductor's total capital expenditure will reach $56 billion in 2026, further climbing to $73 billion in 2027. However, supply bottlenecks for extreme ultraviolet (EUV) lithography equipment may somewhat limit the actual implementation of capital expenditures and equipment procurement.

In terms of market consensus expectations, analysts currently expect Taiwan Semiconductor's adjusted EPS for the second quarter to be $3.83, with revenue of $39.32 billion

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