NEW YORK, July 16, 2026, 2:20 p.m. EDT. Semiconductor shares dropped 5% as investors looked past AI demand to focus on margins.
- The PHLX Semiconductor Index (INDEXNASDAQ:SOX) dropped 5.0% to 11,780.39.
- Taiwan Semiconductor Manufacturing Co. NYSE:TSM forecast 12.4% sequential revenue growth, but a 3.3-point lower operating-margin midpoint.
- TSMC raised its 2026 capital spending midpoint by 14.8%, increasing pressure on near-term cash returns.
U.S. chip stocks fell Thursday, even as TSMC raised its outlook. The sector index dropped nearly 5% in afternoon trading.
The selloff signals a tougher investor test. Demand is still rising, but new capacity is weighing on expected margins and cash returns.
TSMC’s third-quarter revenue midpoint is $45.2 billion, up 12.4% from the previous quarter. Its operating-margin midpoint is 57%, down 3.3 percentage points. That gap is the day’s clearest signal.
The U.S. market stayed open. All prices below were intraday.
| Asset | Price or level | Day move |
|---|---|---|
| PHLX Semiconductor Index (INDEXNASDAQ:SOX) | 11,780.39 | -5.0% |
| Taiwan Semiconductor Manufacturing Co. NYSE:TSM | $404.21 | -3.6% |
| ASML Holding NV NASDAQ:ASML | $1,792.41 | -1.3% |
| Nvidia Corp. NASDAQ:NVDA | $206.63 | -2.8% |
| Advanced Micro Devices Inc. NASDAQ:AMD | $493.58 | -6.7% |
| Marvell Technology Inc. NASDAQ:MRVL | $186.89 | -9.4% |
Index data were current at about 2:20 p.m. EDT. Company quotes were at about 2:04 p.m. EDT.
TSMC earned NT$706.56 billion, about $22 billion, in the second quarter. Profit rose 77.4% and topped the pre-report LSEG SmartEstimate by 11.7%. Dollar revenue rose 33.7%.
The company raised its 2026 revenue-growth outlook to slightly above 40%. Its earlier forecast was for growth above 30%. Planned capital spending increased to between $60 billion and $64 billion.
“The AI trade isn’t being priced on growth anymore. It’s being priced on perfection,” said Gene Goldman, Cetera’s chief investment officer. He called Thursday’s move a market pause. Reuters
TSMC finance chief Wendell Huang cited “continued strong demand” and a steep two-nanometer ramp. Advanced nodes made up 77% of second-quarter wafer revenue. pr.tsmc.com
Upstream demand also remains strong. ASML raised its 2026 sales range to €43 billion to €45 billion on Wednesday. The midpoint was about 16% higher than its prior range.
ASML plans to increase low-NA extreme-ultraviolet capacity by 30% in 2027. It is considering another 30% increase for 2028. Its U.S. shares still slipped Thursday.
AMD and Marvell lagged the sector index. Nvidia fell 2.8%. The breadth suggests investors are separating demand evidence from near-term stock upside.
Earlier Thursday, the index was up 67.4% for 2026. Its later level was 19.6% below the 52-week high. Strong fundamentals meet a crowded starting point.
The next test is utilization. New fabs must fill quickly for margins to recover. Chip designers need customer budgets to keep up.
Risks: Intraday prices can reverse before the close. Faster utilization could restore margins sooner. Delays or weaker AI budgets would increase the pressure.
