To The Moon

$Taiwan Semiconductor Manufacturing(TSM)$ $ASML Holding NV(ASML)$ $NVIDIA(NVDA)$ 💻📈🧠 TSMC Unleashed: Profit Surges 61% as AI Demand Ignites Semiconductor Supercycle 🧠📈💻

I’m tracking Taiwan Semiconductor Manufacturing Co. ($TSM) after it delivered a knockout Q2’25, blowing past analyst estimates across every meaningful line. The company’s profit surged 61% YoY, revenue climbed 44.4%, and EPS beat by 16.5%. That’s not just an earnings beat, it’s a statement of dominance during the most transformative period in chipmaking history. With 74% of wafer revenue coming from advanced nodes (7nm and below), and 60% of platform revenue tied directly to AI and high-performance computing, TSMC has cemented itself as the silicon engine powering the global AI boom.

📊 Q2’25 Results: Precision Beats Across the Board

Revenue reached $30.07B (vs $30.00B est), while net income soared to $13.5B (vs $12.1B est). EPS landed at $2.47 (vs $2.12 est). Gross margin expanded to 58.6%, and operating margin hit 49.6%, both comfortably ahead of expectations. Wafer shipments totaled 3,718K 12” equivalents, up 19% YoY. Free cash flow came in at NT$199.85B, while CapEx for the quarter was NT$297.22B (~$9.63B).

That margin expansion was especially impressive considering foreign exchange pressures and margin dilution from overseas fabs. Management flagged FX and tariffs as potential risks, but still raised FY25 revenue growth to +30% YoY, up from prior mid-20% guidance.

🔬 Technology Mix: The 3nm and 5nm Juggernauts

Advanced technologies (7nm and below) contributed 74% of total wafer revenue:

• 5nm: 36%

• 3nm: 24%

• 7nm: 14%

This mix is where the money and margins are. 3nm saw strong demand from AI server chips, and management confirmed tight capacity. That gap between supply and demand is narrowing fast, and as they ramp N2 in 2H25, that should support continued pricing strength at the premium nodes.

📱 Platform Breakdown: AI is the Growth Engine

Revenue by platform in Q2’25:

• AI/HPC: 60%, +14% QoQ

• Smartphone: 27%, +7% QoQ

• IoT: 5%, +14% QoQ

• Automotive: 5%, flat QoQ

• DCE: 1%, +30% QoQ

• Others: 2%, +6% QoQ

AI and HPC are doing the heavy lifting, and the DCE platform’s 30% QoQ spike is a stealth growth engine that reflects rising edge workloads and smart infrastructure buildout.

💸 Margins & Guidance: Holding Strong Under Macro Pressure

Q3’25 guidance came in strong:

• Revenue: $31.8B–$33.0B (vs $31.72B est)

• Gross margin: 55.5%–57.5%

• Operating margin: 45.5%–47.5%

Despite structural dilution from overseas fab expansion in the US, Germany, and Japan, TSMC reiterated its long-term gross margin target of ≥53%. The FX headwinds were real, but better cost absorption and utilization offset that. Improved A/R and inventory days reflect stronger operational execution, even with increased 3nm/5nm volume.

🌐 Macro Forces & Capacity Expansion

Management is spending aggressively, $38B, $42B CapEx guidance for FY25 remains unchanged. The $100B Arizona expansion is progressing, alongside Japan and Germany fabs. These are margin-dilutive in the near term but strategic for geopolitical diversification. CEO C.C. Wei said orders are still running hot and that Nvidia’s H20 export resumption could further boost demand, though it’s not yet included in guidance.

🇨🇳 Importantly, FX volatility and US~China trade dynamics remain risk factors. Management explicitly flagged those during the call, but also noted their hedging programs and customer pricing adjustments as partial mitigants.

📈 Technical Setup: Bullish Momentum with Institutional Flow

TSM broke to $248 in overnight trading, up 4.4%, hitting a fresh 52-week high. Momentum remains strong:

• Weekly RSI near 81 indicates overbought, but no bearish divergence

• MACD histogram is still rising, no crossover yet

• DMA(5,10,20) stack is bullish with wide separation

• Post-market volume surged past 922K shares

If we hold above $252.99 (overnight high), I’m watching for a breakout to $260–$263 short term. A pullback to $240 would be a healthy retest zone, aligned with the 9EMA and former resistance band.

💬 Analyst Coverage & Sentiment

Bloomberg, Visible Alpha, and MW all confirmed that Q2 came in ahead of consensus across the board. CEO commentary on sustained demand from Nvidia and Apple reinforces the bullish tone.

On the sell-side:

• Goldman Sachs reiterated Buy, raising their price target to $285

• Morgan Stanley now sees $290 as a base case, citing N3/N5 utilization

• Barclays remains Overweight with a $278 target, citing strong FCF durability

On the flip side, Bernstein slashed ASML’s target to $743 and flagged 2026 growth concerns. That decoupling signals caution upstream but underlines TSMC’s strategic position as the bottleneck beneficiary.

🧠 Options & Capital Flows

Unusual call activity spiked after earnings:

• $250C and $255C for August and September showed sharp IV increases

• Open interest building fast, suggesting directional conviction

Short interest remains below 1%, confirming it’s not a bear magnet. Institutional flows tracked by 13F and options flow screens point toward net buying by macro hedge funds and multi-strats rotating into semi exposure post-ASML dip.

📅 Upcoming Catalysts

• August: China trade data and potential US chip export regulation updates

• September 16: Ex-dividend date

• Q3 earnings (mid-October): Could reflect impact of Nvidia H20 China uplift

• N2 ramp updates: Watching for packaging throughput and capex deployment on advanced CoWoS and SoIC capacity

📌 Risk Map

• FX weakness in USD could tighten margins

• Tariff escalation or US restrictions on advanced node exports

• Delays in Arizona/Japan/Germany fab timelines

• Cost overruns on N2 ramp

• AI pullback or order deferrals from Nvidia or AMD

🎯 Strategy & Execution Plan

I’m positioning into strength but with tiered scaling:

• Add above $252 breakout with stop near $240

• Sell vertical call spreads near $270 for October expiry

• Hedge with light puts if RSI pushes above 85 with stalling volume

Short-term traders may look for a mean-reversion bounce at $240–$243, while longer-term holders can hold through volatility as TSMC transitions from cyclical to structural AI beneficiary.

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Trade like a boss! Happy trading ahead, Cheers, BC 📈🚀🍀🍀🍀

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