Taiwan Semiconductor's July Revenue Rose 45% and the Stock Sits 13% Below Its High

Taiwan Semiconductor Manufacturing (NYSE: TSM) said Monday that its July revenue reached NT$467.58 billion, a record month, up 44.7% from a year earlier and 5.6% above June. Seven months into 2026, the chip foundry giant's revenue is running 37% ahead of the same stretch last year.

The stock closed Monday at $418.47. That's about 13% below its 52-week high of $479, and it leaves the company's market value near $1.9 trillion.

A company posting record months doesn't usually trade at a discount to its own recent price. What is the market bracing for that the monthly numbers don't show?

Image source: TSMC.

A lumpy tape, one direction

TSMC discloses revenue monthly, and the 2026 sequence swings: April rose 17.5% year over year, May 30.1%, June 67.9%, and July 44.7%.

Shipment timing whips these rates around, so no single month is a trend. June's 68% wasn't a new normal, and July's 45% isn't a slowdown. The steadier measure is the running total, up 37% through seven months, with July the biggest month the company has ever reported.

Worth remembering who those chips are for. TSMC manufactures chips for nearly every big tech company, Nvidia and Apple among them, so its monthly revenue doubles as a rough gauge of how hard the whole artificial intelligence (AI) buildout is running.

The guided year

The monthly tape matches what management already promised. When TSMC reported second-quarter results in July, revenue of $40.2 billion was up 33.7% year over year in U.S. dollar terms.

Guidance went up alongside. Management's third-quarter outlook calls for revenue of $44.6 billion to $45.8 billion, about 12% above the quarter just reported at the midpoint, and a gross margin of 65% to 67%. That's a level of profitability most businesses never see in their best year.

The full-year bar moved higher, too. Management raised its 2026 outlook to revenue growth slightly above 40% in dollar terms, and lifted its capital spending budget to $60 billion to $64 billion, from the $52 billion to $56 billion planned in January. After all, factories get built for demand that management says it can see.

Guidance is a forecast, not a result, and this one needs the second half to keep climbing. The first seven months run 37% ahead in New Taiwan dollars, which doesn't line up directly with a full-year guide given in U.S. dollars. And the third-quarter guide calls for about 12% more revenue than the record quarter just reported -- back-to-back records, if it lands.

Priced for a turn

Set that against the price. At about $418, the stock trades at roughly 27 times earnings and about 19 times forward earnings. At its 52-week high, the same forward estimates would put the multiple near 22.

The gap between the trailing and forward figures is its own signal. Earnings are expected to grow fast enough that the same price costs about eight fewer multiple points a year out.

For a business guiding to 40%-plus growth this year, that's a price with an ordinary year built into it. And the discount has its reasons. Semiconductors are cyclical, the pace of AI spending is the industry's biggest open question, and TSMC carries geopolitical risk tied to Taiwan.

Each is a fair reason for some discount. But the market is pricing the turn as near, and the company's own disclosures keep pushing it further out. Guidance was raised at midyear, not trimmed. The monthly reports keep setting records.

The monthly cadence also means a slowdown would be hard to miss. When the cycle does turn, these same reports will show it within weeks, arguably before most of TSMC's customers say it out loud. For the price to be the one that's right, that turn has to arrive soon enough to make about 19 times forward earnings look expensive. Nothing disclosed so far points that way, but that is the bet the drawdown represents.

To me, the burden of proof sits with the discount. A company growing this fast, at about 19 times forward earnings, is priced like an ordinary business having an ordinary year -- and TSMC's own numbers keep describing something else.

Of course, the cycle will turn eventually. The industry hasn't stopped being cyclical, and when spending cools, a foundry feels it early. But nothing in the tape through July says it has started. The growth keeps showing up.

Daniel Sparks and his clients have positions in Apple. The Motley Fool has positions in and recommends Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.