Analysts anticipate Taiwan Semiconductor Manufacturing (TSM.US) will provide an update on its financial outlook and capital spending plans during its second-quarter analyst conference on July 16. A recent research report forecasts the company is likely to raise its full-year performance guidance and simultaneously increase its capital expenditure budget for 2027.

The report highlights that sustained demand for AI accelerators and CPUs continues to keep utilization rates for advanced process nodes high. A supporting trend is the increasing memory capacity on chips, which cannot be mitigated simply by process node shrinkage. It is noted that TSMC's acceleration in capital spending began in 2025, lagging the start of the AI demand cycle by approximately 1.5 to 2 years. This lag suggests some market share loss or demand spillover was inevitable.

Consequently, expectations are that TSMC may further accelerate capacity expansion for its N5, N3, and N2 nodes in the second half of 2027, potentially accompanied by strategic pricing adjustments. The report reiterates a buy rating on the stock and raises the price target.

Earnings per share forecasts for 2026 and 2027 have been revised upward. For the second quarter, revenue is projected to increase sequentially by approximately 11%, slightly above the company's guidance midpoint. The gross margin is estimated at around 68%. For the third quarter, sequential revenue growth is forecast at 13%, with the gross margin expected to dip slightly.

The full-year revenue growth guidance, currently set above 30%, is anticipated to be revised further upward. Regarding capital expenditure, projections indicate a total of $56 billion for 2026, climbing to $73 billion for 2027. However, supply constraints for extreme ultraviolet lithography equipment could pose a limitation on the actual execution of these spending plans.

Current market consensus estimates project the company's adjusted earnings per share at $3.83 on revenue of $39.32 billion for the second quarter.