TSM Stock Slips 2.3% Despite Record Profit as AI Demand Meets Capex Concerns

Quick overview

Taiwan Semiconductor Manufacturing (NYSE: TSM) fell in overnight trading even after reporting a record second quarter, as investors weighed booming AI chip demand against higher capital spending and near-term technical weakness.

TSM last traded at $409.74, down 2.32%, before slipping further overnight to $407.20, down 0.64%. The decline came despite another strong earnings report from the world’s most important advanced-chip foundry.

Record Quarter Shows AI Demand Is Still Running Hot

TSMC’s second-quarter results showed why the company remains central to the AI trade. Revenue rose to NT$1.27 trillion, while net income jumped to NT$706.56 billion. In U.S. dollar terms, revenue reached $40.20 billion, up 33.7% from a year earlier.

Advanced nodes continued to dominate the revenue mix. The company said 3-nanometer chips accounted for 30% of wafer revenue, 5-nanometer contributed 33%, and 7-nanometer added 11%. Advanced technologies, defined as 7nm and below, made up 77% of total wafer revenue.

Management said demand for leading-edge process technologies remains strong, with the 2-nanometer ramp expected to support third-quarter performance.

Pricing Power Adds a Longer-Term Tailwind

Beyond leading-edge AI chips, TSMC is also reportedly preparing mature-node price increases for early 2027. That would mark its first broad mature-node price increase in more than three years.

If customers absorb those increases, TSMC could benefit from a healthier revenue mix across both advanced and legacy processes. The risk is that price-sensitive customers may shift some orders to rivals such as Samsung, GlobalFoundries or United Microelectronics.

For now, investors are balancing two stories: powerful AI-driven demand today and rising capital intensity tomorrow.

Why TSM Stock Fell Anyway

The pullback appears tied less to current demand and more to future spending. TSMC raised capital expenditure expectations to support AI, advanced packaging and next-generation process capacity.

Investors often welcome growth spending, but the scale matters. Higher capex can pressure free cash flow and margins, especially after a huge share-price run. TSM is still up strongly over the past year, so the market is quick to punish anything that looks like near-term margin risk.

At the same time, some investors may be locking in profits after AI semiconductor names ran hard into earnings season.

TSM Technical Analysis: Bulls Need to Reclaim $420

On the 4-hour chart, TSM’s technical setup has weakened. The stock is below nearly all major short- and medium-term moving averages.

The first resistance zone sits around $420-$431, where the 10 EMA at $420.24, 10 SMA at $421.54, 100 EMA at $421.83, 100 SMA at $425.87, 20 EMA at $427.62, and VWMA at $428.50 cluster together. A recovery above this range would be needed to repair short-term sentiment.

The next resistance is higher near $436-$441, where the 30/50-period averages and Ichimoku baseline sit.

Support is now near the overnight price around $407, followed by the Hull MA at $409.41 and the 200-period moving-average zone at $397.61-$393.26. A break below $393 would deepen the bearish setup and could expose the $380 area.

Momentum is mixed. RSI at 37.70 shows weakness but is not oversold. CCI, Stochastic RSI and Williams %R are flashing buy signals, suggesting the selloff may be stretched. However, MACD remains on a sell signal, so a reversal still needs confirmation.

TSMC Offers a Strong Business, But Fragile Chart

TSMC’s fundamentals remain exceptional. AI demand, advanced-node leadership and 2nm ramp visibility all support the long-term case. But the stock now needs to prove that investors can look past higher capex and margin pressure.

For traders, the near-term line is clear: reclaim $420-$431 to stabilize, or risk another test of $397-$393 support.

ABOUT THE AUTHOR See More

Aiswarya Gopan

Financial Writer & Editor - Asia & Europe Desk

Aiswarya Gopan is a financial journalist, editor, and content strategist with more than 19 years of experience across financial markets, fintech, blockchain, and technology. She has worked with leading cryptocurrency exchanges, including BingX and KuCoin, driving content strategy, market research, and editorial initiatives covering digital assets, DeFi, Web3, and global financial markets. Drawing on a background in cybersecurity, technology journalism, and market research, Aiswarya specializes in translating complex financial and blockchain developments into clear, timely insights. At FX Leaders, she covers cryptocurrency, stocks, forex, and macroeconomic developments across the Asian and European trading sessions.

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