Taiwan Semiconductor Manufacturing Company delivered another set of record-breaking results on Thursday, posting a first-quarter net income of NT$572.48 billion ($18 billion), up 58% year-over-year and marking the company’s eighth consecutive quarter of double-digit profit growth.
Revenue came in at NT$1.134 trillion ($35.9 billion), above the $35.5 billion analyst consensus, with gross margin at 66.2% and operating margin at 58.1%, both exceeding the high end of the company’s own guidance.
The result was driven almost entirely by AI chip demand. Chips built on the 3-nanometer process node now account for 25% of TSMC’s total wafer revenue, a dramatic increase from 6% in Q3 2023. The 5-nanometer node contributes a further 36%, meaning advanced technologies collectively represent 74% of total wafer revenue, a figure that underscores how comprehensively AI infrastructure investment has reshaped the chipmaker’s revenue mix.
TSMC Chairman CC Wei described AI chip demand as “extremely robust” during the earnings call and expressed “high conviction” in what he called the multi-year AI megatrend. William Li, a senior analyst at Counterpoint Research, reinforced that view externally, telling CNBC that demand has pushed TSMC’s manufacturing capacity to its limits. “The narrative for 2026 is as much about resource constraints as it is about growth,” Li said. “We expect this sold-out environment to remain a defining characteristic of the semiconductor industry throughout 2026.”
The company upgraded its full-year 2026 revenue outlook, now projecting growth exceeding 30% in US dollar terms, a step up from its prior guidance of approximately 30%. Capital expenditure for the year is expected to come in toward the top of the $52 billion to $56 billion guidance range, which would represent an increase of as much as 37% from 2025 and reflects ongoing investment in both advanced node capacity and geographic expansion.
For Q2 2026, TSMC guided revenue between $39.0 billion and $40.2 billion, at an implied 30% year-over-year increase, confirming that the AI-driven growth trajectory shows no sign of plateauing. Gross margin guidance for Q2 was set at 65.5% to 67.5%, consistent with the strong profitability profile of recent quarters.
TSMC shares fell approximately 2.4% on Thursday despite the strong results, reflecting broader market caution rather than anything company-specific. Analysts at Bank of America reiterated a buy rating, with Haas Liu noting that the current valuation at 15x 2027 price-to-earnings “is undemanding” given the structural growth characteristics of the business. The stock has surged nearly 150% over the past year and trades near its 52-week high of $390.20, creating a baseline where very strong results are sometimes treated as already priced in.
TSMC is expanding its manufacturing presence significantly. The Arizona buildout, into which the company has committed $165 billion, anchors its US strategy. Additional capacity is being added in Hsinchu, Kaohsiung, Japan and the US, with the N2 process node having entered high-volume manufacturing in Q4 2025 and ramping across multiple sites to meet demand from both smartphone and high-performance computing AI applications.
