- Stocks jumped as TSMCs blowout quarter and upbeat outlook strengthened confidence in AI-driven chip demand.
- TSMC said 2026 capex will surge to $526B, mostly for leading-edge nodes, while guiding to roughly 30% revenue growth and strong margins.
- Bank stocks rallied after Goldman posted record equity-trading revenue and higher investment-banking fees, with Morgan Stanley also reporting strong profit growth.
- AI optimism lifted the chip supply chain, with ASMLs market cap topping $500B on expectations of higher equipment spending.
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The latest earnings reports and forward guidance from Taiwan Semiconductor Manufacturing Company (TSMC) and Goldman Sachs present a nuanced but compelling picture of a market in transition. TSMC’s performance confirms that the AI hardware boom is not just hype but translating into material orders, margin expansion, and long-term investment. The chip-equipment supply chain is benefitting concurrently, with ASML riding this wave. Meanwhile, financial firms are capturing the upside through trading and dealmaking, suggesting a bifurcation where growth and profitability cluster around those with leverage to AI and capital-intensity.
TSMC: sustaining the lead
TSMC’s Q4 2025 net profit rose 35% to NT$505.7B (~US$16B), with revenue of NT$1,046B (~US$33–34B), up 20–21% YoY. Advanced nodes (≤7nm) contributed 77% of wafer revenue, underscoring technology leadership.
Looking forward, the company expects 2026 sales growth of nearly 30% in U.S. dollar terms, with revenues for Q1 between US$34.6B–35.8B, up ~38%. Margins are projected to improve further, with gross margin expected at 63–65% and operating profit in the mid-50s percent. Capital expenditure will rise sharply, with US$52–56B being deployed in 2026, up ~30–40% from 2025’s ~US$40.9B; 60–80% of that will go into leading-edge process nodes.
Goldman Sachs & Banking
Goldman Sachs set a new high for a U.S. bank’s equity trading revenues at US$4.31B for Q4 2025, driven by market volatility and AI-related investor positioning. Fixed income, currency, and commodities trading also increased by 12.5% YoY, and investment banking fees rose 25% to US$2.58B, although slightly under analyst expectations. Profit per share (US$14.01 vs. est. US$11.67) also substantially beat. Morgan Stanley similarly posted strong gains (~19% YoY) in net profit in Q4, largely fueled by institutional activity.
Strategic implications
TSMC’s aggressive capex and continuing dominance in advanced semiconductors suggest it is consolidating its technological moat. Suppliers like ASML are natural beneficiaries. For investors, exposure to AI infrastructure, equipment, and foundry specialists remains compelling. On the banking side, firms with strong market franchises and dealmaking momentum—especially those exposed to AI and tech—look well-positioned. That said, risks include overinvestment, competitive pressures (from Intel, Samsung), margin compression (especially in U.S. fabs), and macroeconomic uncertainty including interest rate policy.
Open questions
- How will rising costs—overseas fabs, tool pricing, energy—impact margins especially for capacity expanded outside Taiwan?
- To what extent can Goldman and peers sustain elevated trading revenues when volatility subsides or when yield curves shift?
- Will TSMC’s capex generate sufficient returns if inflation, labor cost, and supply chain constraints intensify?
- What regulatory or trade risks (tariffs, export controls) might affect both chip supply chains and banking / capital flows?
Supporting Notes
- TSMC’s Q4 2025 net profit up 35% YoY to NT$505.74B (~US$16.02B); revenue rose ~20–21% YoY to NT$1,046.09B (~US$33.7B).
- Advanced nodes (≤7nm) accounted for 77% of wafer revenue in Q4; 3nm and 5nm accounted for 28% and 35% respectively; 7nm ~14%.
- Projected revenue growth in 2026 at ~30% YoY; Q1 guidance of US$34.6–35.8B, up ~38% YoY; margins of 63–65% gross, 54–56% operating.
- Capex for 2026 planned at US$52–56B, up from US$40.9B in 2025; 60–80% towards leading-edge processes; 10% specialty; 10–20% packaging & related.
- GS equity trading revenue Q4 2025 was US$4.31B, a Wall Street record; FICC trading up 12.5% YoY to US$3.11B; investment banking fees rose 25% to US$2.58B.
- Goldman beat profit estimates: $14.01 EPS vs ~$11.67 expected; Morgan Stanley reported 19% YoY net profit growth.
- ASML market cap exceeded US$500B after TSMC’s capex boost; up ~21% in investment in chip-equipment expected.
- TSMC cautioned about investing “carefully” despite optimism, noting challenges in cost and complexity for leading-edge nodes.