To The Moon

$Taiwan Semiconductor Manufacturing(TSM)$ $Advanced Micro Devices(AMD)$  $NVIDIA(NVDA)$  🚨 $TSM Options Traders Bet Wrong? AI Growth Outlook Jumps Above 40% 🚀📈

The options market turned aggressively bearish heading into $TSM earnings.

📉 10-day put/call volume ratio surged to the 98th percentile of the past year.

📉 The stock is on pace for 6 consecutive down days and is now 14% below its June record high.

📈 Despite the recent pullback, shares remain up 36% YTD.

Then TSMC delivered one of its strongest quarters ever.

🟢 EPS: $4.31 vs $3.94 expected

🟢 Revenue: $40.2B vs $39.3B expected

The biggest surprise wasn’t the earnings beat. It was management raising full-year 2026 revenue growth guidance from above 30% to slightly above 40%.

For a company of this size, that is a remarkable upgrade.

🐂 Bull Case

🚀 AI demand continues to accelerate, with management expecting supply to remain constrained through at least 2027 and demand potentially extending into 2029-2030.

💰 Operating margin reached 60.3%, beating guidance, while gross margin expanded to a remarkable 67.7%.

🏭 Capital expenditure increased to $60-64B, signalling confidence that AI demand remains far stronger than available capacity.

🧠 HPC now accounts for 66% of revenue, confirming AI infrastructure has become TSMC’s dominant growth engine.

⚡ Agentic AI is creating a second wave of semiconductor demand by boosting CPU requirements alongside GPUs and AI accelerators. Whether customers choose x86, Arm or RISC-V, TSMC is manufacturing chips for nearly all of them.

🔬 The 2nm ramp has begun, contributing 3% of wafer revenue in its first meaningful quarter and positioning TSMC for another multi-year technology leadership cycle.

🐻 Bear Case

⚠️ Accounts receivable jumped 87% YoY, far outpacing revenue growth. While receivable days remain healthy, the trend deserves monitoring as AI customer concentration increases.

⚠️ Free cash flow has declined for two consecutive quarters as record CapEx outpaces operating cash flow growth.

⚠️ Gross margin is expected to ease next quarter as the expensive 2nm production ramp accelerates.

⚠️ TSMC is making one of the largest investment cycles in semiconductor history. If AI infrastructure spending slows before that capacity comes online, returns could disappoint.

⚖️ My Verdict

This quarter reinforces TSMC’s position as the backbone of the AI revolution.

Markets often punish great companies when expectations become extremely high, but lifting full-year growth guidance by more than 10 percentage points halfway through the year is exceptionally rare.

The balance sheet deserves monitoring, particularly receivables and free cash flow, yet the operational performance, AI demand outlook and guidance upgrade remain overwhelmingly positive.

With options traders positioned near peak bearishness while fundamentals continue strengthening, I believe sentiment may be lagging reality.

Sometimes the market offers its best opportunities when exceptional businesses produce exceptional results, yet the share price moves the other way.

What do you think?

Would you rather own $TSM, $NVDA or $AMD for the next three years, and why?

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