Taiwan Semiconductor Manufacturing Company (NYSE: TSM) delivered a record-breaking second quarter in 2026 and still saw its stock sell off as investors focused on an aggressive capital spending ramp. TSMC reported Q2 revenue of $40.2 billion, landing at the high end of its own guidance and ahead of Wall Street expectations. Net profit hit a record near $22 billion, and gross margins came in at 67.7%, topping management's own forecast. The growth was driven by relentless demand for AI processors. Despite the beat, TSM shares dropped after management raised 2026 capital expenditure guidance to a range of $60 billion to $64 billion up from a prior range of $52 billion to $56 billion. Most of the incremental spending is earmarked for advanced chip nodes serving AI and high-performance computing customers. The reaction created a "great quarter, scary spend" dynamic. Earlier in the AI chip cycle, the market largely shrugged off rising capex as the cost of doing business. Thursday's selloff s...