TSMC’s record quarter triggers an AI spending selloff

TSMC’s record quarter was not enough to reassure investors. The chipmaker reported more than $40 billion in second-quarter revenue, up 36% year over year, while net income rose 77%. Its shares nevertheless fell 4%, helping push the Nasdaq 100 down 1.4% on Thursday after losses the previous day.

The pressure came from spending, not earnings. TSMC raised its 2026 capital expenditure forecast to $60–64 billion, up from $52–56 billion. Investors are increasingly demanding evidence that the industry’s enormous infrastructure outlays will produce comparable returns.

The AI industry has spent nearly $1.6 trillion on development over the past decade, yet returns have not clearly materialized at the scale implied by current valuations. The semiconductor index is down nearly 19% from its all-time high, while market concentration has already surpassed dot-com levels, according to the source.

TSMC is a key indicator because it manufactures chips for Nvidia, Apple, and nearly every other major company driving the AI boom. A selloff after its strongest quarter sends a clear message: investors want proof rather than promises.

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The shift is consistent with warnings from the BIS, Man Group, and Goldman Sachs in recent weeks. The AI bubble has not burst, but the bill for its infrastructure is coming due. TSMC may continue posting record revenue as long as spending holds up; the harder question is whether chip buyers can generate enough returns to justify the trillion-dollar collective bet—or whether demand arrives later, at a smaller scale, or not at all.