Taiwan Semiconductor (TSM) Stock: Crushes Estimates with 35% Profit Jump

TLDR

Table of Contents

Fourth-quarter net income reached NT$505.74 billion, beating analyst forecasts by 5.7%
Q4 revenue hit NT$1.046 trillion ($33.73 billion), marking eighth consecutive quarter of profit growth
2026 capital spending projected at $52-56 billion, up 25% from 2025
Advanced 7nm or smaller chips made up 77% of wafer revenue
Company forecasts nearly 30% revenue growth for 2026

TSMC crushed fourth-quarter expectations with net income of NT$505.74 billion, representing a 35% year-over-year increase. The result topped analyst estimates and set a new company record.

TSMC Q4’25 Earnings Highlights:

✅ Revenue beat — $33.73B vs $33.3B est
✅ Gross margin beat — 62.3% vs 60.5% est
✅ Operating margin beat — 54.0% vs prior 49–51% guide
✅ Net profit beat — $16.30B vs $15.2B est

👉 TSMC $TSM smashed expectations across the board, signaling… pic.twitter.com/6z22KlZkAo

— Trader Edge (@Pro_Trader_Edge) January 15, 2026

Revenue for the December quarter reached NT$1.046 trillion, beating forecasts and climbing 20.5% from the prior year. The chipmaker has now delivered eight straight quarters of profit growth.

Taiwan Semiconductor Manufacturing Company Limited, TSM

The company manufactures advanced processors for tech giants including Nvidia and AMD. AI and high-performance computing represented 55% of quarterly sales, while smartphone demand accounted for 32%.

Massive Capital Investment Planned

TSMC’s 2026 spending plans signal strong conviction in AI’s staying power. The company projects capital expenditure between $52 billion and $56 billion, up from $40.9 billion in 2025.

CEO C.C. Wei directly addressed investor skepticism during the earnings call. “You’re trying to ask us whether AI demand is real or not. I’m also very nervous about it,” Wei stated. “We’re investing $52 billion to $56 billion in capex, right? If we don’t do it carefully, that’d be a big disaster for TSMC.”

CFO Wendell Huang guided first-quarter 2026 revenue to $34.6-35.8 billion. At the midpoint, this represents 38% year-over-year growth and 4% sequential gains.

Full-year 2026 revenue is expected to grow close to 30%, surpassing average analyst projections. The company’s 2025 revenue topped $100 billion for the first time in its history.

Advanced chips of 7-nanometer or smaller generated 77% of wafer revenue in Q4. These chips made up 74% of full-year 2025 revenue, up from 69% in 2024.

The company is ramping production of 2-nanometer chips after beginning mass production last quarter. These cutting-edge processors offer faster speeds and improved energy efficiency.

Challenges on the Horizon

A memory chip shortage poses potential headwinds for the semiconductor industry. Manufacturers have prioritized high-bandwidth memory for AI accelerators, creating supply constraints.

Wei downplayed concerns about TSMC’s exposure. The company focuses on premium smartphones, which show less sensitivity to memory price fluctuations.

Global tariff policies represent another risk factor heading into 2026. TSMC is expanding internationally with facilities in Japan, Europe, and Arizona.

The chipmaker expects to be part of an upcoming US-Taiwan trade agreement. This could involve commitments for additional fabrication facilities beyond the planned $165 billion US investment.

Counterpoint Research analyst Jake Lai predicts 2026 will be another breakout year for AI server demand. “With TSMC’s ongoing 2nm capacity expansion and new production contributing to revenue, along with continuous expansion of advanced packaging… TSMC is expected to maintain strong performance in 2026,” Lai said.

ASML Holding’s stock jumped 7.6% to a record following TSMC’s results. The equipment supplier’s market value exceeded $500 billion as investors reacted to the chipmaker’s aggressive expansion plans.

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