Taiwan Semiconductor Manufacturing reported stronger-than-expected Q4 results, with revenue rising 17% year-over-year to $20.3 billion, driven by robust demand for advanced nodes. Analysts revised upward targets for TSM and related AI chipmakers NVDA and AMD, citing sustained capacity utilization and resilience in global semiconductor supply chains.
- TSM revenue reached $20.3 billion in Q4, up 17% YoY
- 3nm and 5nm nodes accounted for 38% of wafer shipments
- Gross margin expanded to 64.5%, up 22% YoY
- Capital expenditure for 2026 set at $40 billion
- NVIDIA (NVDA) and AMD share prices rose 4.7% and 3.1% post-earnings
- TSM utilization rates remain at 98% across advanced fabs
Taiwan Semiconductor Manufacturing (TSM) delivered a standout performance in its latest quarter, reporting $20.3 billion in revenue—up 17% from the same period last year and surpassing analyst expectations by 5.2%. The growth was fueled by record demand for 3nm and 5nm process technologies, which accounted for 38% of total wafer shipments, reflecting heightened adoption by AI-driven clients. The company also achieved a 22% year-over-year increase in gross margin, reaching 64.5%, underpinned by strong pricing power and efficient capacity utilization. Analysts highlighted the resilience of TSM’s manufacturing ecosystem amid geopolitical headwinds and inventory normalization in the broader tech sector. With utilization rates at 98% across its advanced fabs, TSM’s ability to maintain high output has positioned it as a critical enabler for next-generation AI hardware. The company’s capital expenditure plan for 2026 remains aggressive, with $40 billion allocated to expand 2nm and beyond capacity, signaling long-term confidence in the AI infrastructure cycle. The positive outlook extended beyond TSM. Shares of NVIDIA (NVDA) and AMD rose 4.7% and 3.1% respectively in after-hours trading, as analysts noted that TSM’s output growth directly supports the ramp of high-performance GPUs and CPUs. One analyst firm upgraded TSM to 'Buy' from 'Hold', citing a 20% upside potential over the next 12 months, while others reiterated 'Strong Buy' ratings for NVDA, citing TSM’s ability to meet aggressive production schedules for Blackwell and MI300X chipsets. Market participants are now closely monitoring TSM’s guidance for 2026, particularly around 2nm production timelines and the pace of demand from cloud infrastructure providers. The semiconductor supply chain’s stability, as demonstrated by TSM’s results, has bolstered confidence in the broader tech sector, with Intel (INTC) also benefiting from increased foundry orders as it seeks to regain market share.