Key points
- TSMC (TSM) beat Q2 2026 earnings for a seventh straight quarter: revenue of $40.2 billion, up 36% year over year, and net profit up 77%, both records.
- TSMC also raised its 2026 capex forecast to $60-64 billion (from about $56 billion) and its revenue growth outlook to more than 40%, an unusually large capex raise for a Q2 print.
- None of that stopped the semiconductor sector from selling off Thursday morning: Western Digital was down about 5%, SanDisk about 7%, and SK Hynix's Nasdaq-listed shares about 8%, as of late-morning trading.
- Health care picked up the money instead. UnitedHealth Group (UNH) was up about 4.6% and Abbott Laboratories (ABT) jumped roughly 12%, both on their own earnings beats, as of Thursday late-morning trading.
- The Dow, boosted by UnitedHealth, was higher Thursday morning while the semiconductor-heavy Nasdaq lagged, an unusually clean split between the two sectors.
TSMC (TSM) did everything right Thursday, and the market shrugged anyway. Seventh straight earnings beat. Record profit. A spending forecast raised on demand it called "extremely robust." None of it mattered. The semiconductor sector sold off, and the money walked straight into health care instead.
TSMC's actual numbers
Revenue came in at $40.2 billion, up 36% year over year. Net profit surged 77% to a record. Gross margin hit 67.7%, above the 65.5% to 67.5% range TSMC itself had guided to, and operating margin came in at 60.3%, also above guidance. Earnings per ADR share reached $4.31, well clear of the roughly $3.87 analysts were expecting. This extends a beat streak we flagged heading into the print at six straight quarters, so Thursday made it seven. At some point, beating and getting sold anyway stops being a fluke and starts being the pattern.
The capex raise that should have cheered the sector
TSMC also raised its full-year 2026 capex guidance to a range of $60 billion to $64 billion, at least $4 billion above its prior forecast, and lifted its revenue growth outlook to slightly more than 40% from the 30%-plus it had guided to before. TSMC rarely raises capex guidance at its Q2 print. This one topped 10%, unusual enough that UBS analysts called it a move that "boosts confidence in the AI supply chain." Chairman C.C. Wei told analysts AI-related demand "continues to be extremely robust," and the company reaffirmed a $100 billion Arizona investment on top of it. Wall Street agreed it was bullish. Wall Street sold it anyway.
By the textbook, that's a beat-and-raise quarter, the kind that's supposed to send a stock higher. TSM's own US-listed shares slipped about 1% Thursday morning and dragged the rest of the group down with it. Nobody said the textbook always wins. It's the same tension we wrote about with Big Tech's own capex numbers earlier this week: more spending confirms real demand, but it also raises the bar for what "enough" looks like, and a market already pricing in a lot of good news doesn't hand out much credit for more of it.
Where the rest of the sector actually stood
The chip trade broadly sold off Thursday morning. Western Digital (WDC) was down about 5% and SanDisk (SNDK) about 7%, while SK Hynix's Nasdaq-listed shares were down about 8%, all as of late-morning trading. That's not one bad day. It's the same memory-chip complex we covered giving back its spike earlier this week, still working through the hangover from SK Hynix's ADR debut, now getting hit again on TSMC's own margin and capex numbers rather than anything new on memory pricing. We broke down why Korea sits at the center of that memory unwind here.
Health care picked up the money
UnitedHealth Group (UNH) was up about 4.6% Thursday morning after posting adjusted earnings of $6.38 a share, more than 30% above the $4.85 estimate. It also raised full-year guidance to $19.50-$20.00 a share, above the $18.48 analysts expected. Abbott Laboratories (ABT) jumped roughly 12% on its own beat: sales up 13%, adjusted earnings of $1.31 a share, and raised full-year guidance too. Two unglamorous health care names beat their numbers, raised guidance, and got rewarded for it like it's an old-fashioned market again.
The split showed up cleanly across the major averages. The Dow, which counts UnitedHealth among its 30 components, was higher Thursday morning. The S&P 500 and the chip-heavy Nasdaq both lagged, the two benchmarks with the heaviest semiconductor exposure landing on the losing side of the same rotation.
What to actually take from this
None of this means TSMC had a bad quarter, or that chip demand dried up overnight. A seventh straight beat and the biggest capex raise TSMC has handed out in years are both real signals, not noise. What Thursday actually shows is that in a sector priced this rich, a great print buys you an excuse for people to cash out, not a reason for new money to show up. Health care did the boring thing today, beat its numbers and raised guidance, and the market paid up for it. Whether that lasts past one session is the real question here, not whether TSMC's quarter was good. It was.
This is general market commentary and not investment advice. Always do your own research and consider speaking with a licensed financial professional before making any investment decision.
