TMTB Morning Wrap

Good morning. QQQs +25bps as over the last few days The HOT AI SUMMER vibes have broadened into more general animal spirits re-emerging (even into Quantum, Robotoics, Space, etc. ) as leadership has broadened and investors are looking to play whack buy-a-laggard. QQQs are +15% and up 11 days in a row since the last day of March. That looks to continue early today in Tech as TSM -2% is down on a solid print taking semis down with it and Software up another 1-2% across the board. ORCL +4% leading large cap higher but NOW also +4% on some positive 3p checks while MSFT +~2% again.

Asia generally green overnight: TPX +1.17%, NKY +2.38%, Hang Seng +1.72%, HSCEI +2.14%, SHCOMP +0.7%, Shenzhen +1.8%, Taiwan TAIEX +1.12%, Korea KOSPI +2.21

Yields, Oil and BTC all flattish.

Lots to get to. We’ll hit TSM first, then onto the usual.

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TSM: solid beat with rev at top end of guide and GPM (66.2%) above 63-65% guide and street at 64.5%, “continued tightness into 2027”

Q1 #s:

TSMC reported 1Q26 revenue of US$35.9bn, up 6.4% q/q and modestly above guidance. Gross margin came in at 66.2%, up 390bps sequentially and ahead of the 63-65% guide, supported by cost improvements, better fab loading, and favorable FX. ROCE reached 40.5%. Advanced process technologies represented 74% of wafer revenue, with 3nm/5nm/7nm contributing 25%/36%/13%. By end market, HPC, smartphones, IoT, and automotive accounted for 61%/26%/6%/4% of sales, with q/q growth of +20%/-11%/+12%/-7%, respectively.

Q2 Guide FY Guide:

For 2Q26, management guided revenue to US$39.0-40.2bn, implying about 10% q/q growth at the midpoint. Gross margin is expected at 65.5-67.5% and operating margin at 56.5-58.5%. Given continued strength in AI demand, TSMC now expects 2026 revenue to increase by more than 30% y/y, compared with its prior view of around 30% growth. TSMC now expects 2026 capex to land near the top end of its US$52-56bn range, reflecting stronger HPC and AI-related demand. Management also said capex over the next three years should run well above the prior three-year period, although it does not see a major change in capital intensity

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