TSMC shares fell roughly 4% in the morning session as the company raised its capital expenditure guidance to $60–$64 billion.
TSMC shares fell roughly 4% in the morning session despite a record profit beat, as the company raised its full-year 2026 revenue growth outlook to slightly above 40%. The market reacted to a capital expenditure reset, with the company increasing its guidance to $60–$64 billion from a previous ceiling of $56 billion. While TSMC confirmed that artificial intelligence demand remains "extremely robust," the higher spending costs are expected to compress near-term free cash flow and dilute gross margins in the second half of the year. The selloff occurred amid a broader semiconductor sector decline that began with ASML the previous day. Investors are now focusing on the high costs of scaling AI manufacturing capacity, which may lead to a de-rating of valuation multiples as profit margins absorb the burden of rapid expansion. Despite the price drop, analysts suggest that the market may be overreacting, potentially creating a buying opportunity for high-quality stocks. Investors will now look to major hyperscalers to determine if software monetization can justify these massive hardware costs.