TSMC beat-and-raise demonstrates that semiconductor momentum is continuing
After robust revenue growth was published last week, TSMC’s superb financial results were well-discounted.
Taiwan Semiconductor Manufacturing Co.’s first-quarter results were revealed Thursday, with the beat and raise exceeding already high expectations and showing, above all, that momentum in the chip investment cycle remains strong.
TSMC, a supplier to Nvidia and other leading chipmakers, reported that net income for the first three months of the year, including the volatile month of March, increased 58% to 572.4 billion New Taiwan dollars ($18 billion), with earnings per share of TWD22.08, substantially above analyst expectations of TWD20.88.
The challenge for TSMC management is to consistently surprise investors with earnings strength. Revenue guidance for the second quarter has been raised to between $39 billion and $40.2 billion, up from roughly $38 billion previously estimated. Revenue growth for the entire year of 2026 is expected to exceed 30%, despite earlier promises of “close to 30%” in January.
CC Wei, the company’s chairman and CEO, made it plain that growth would not come at the expense of profitability. The gross margin of 66.2% in the first quarter is above the 64.5% consensus, and the full-year guidance around that level may lead analysts to raise their price forecasts.
The constant demand for AI gear has positioned chipmaker TSMC at the center of the AI ecosystem. TSMC’s global buildout supports the capex plans of major clients like Nvidia (NVDA +1.20%) and Apple (AAPL +2.94%), who utilize its chips in a variety of products, including smartphones and processors.
One reason for the revenue and margin growth is the strong demand for TSMC’s premium goods, such as advanced processors, which now account for 75% of total wafer revenue. Its high-performance branch, which produces chips for AI and 5G applications, now accounts for about two-thirds of its total sales.
Investors wanted to know if the Middle East conflict was impacting supply chains, operational performance, or end-demand, but management made it plain that the situation was not the case. Wendell Huang, chief financial officer, informed investors and customers that supplies of chipmaking ingredients such as hydrogen and helium are now secure, thanks to substantial inventories and diversified supply sources.
CC Wei stated that “the recent situation in the Middle East brings macroeconomic uncertainties,” but for now, “AI-related demand continues to be extremely robust.” To underline this point, Meta and Broadcom announced an AI chip collaboration on Wednesday, which appears to enhance TSMC’s order book even further.
TSMC shares have risen by 146% in the last year, and even in 2026, a terrible year for markets, the company has returned 23%.
Prior to today’s release, the average target price was TWD2390, which is almost 15% higher than current levels, and the majority of analyst recommendations are buy or overweight.