- TSMC beat Q4 expectations with ~35% YoY profit growth and ~20% revenue growth, reinforcing strong AI-driven demand for advanced chips.
- The company guided to ~30% 2026 revenue growth and lifted 2026 capex to US$52–56B, signaling aggressive capacity expansion.
- TSMC’s results sparked a broad semiconductor and AI-hardware rally that lifted U.S. tech shares and major indexes.
- Key risks remain around geopolitics and trade policy, the sustainability of the capex cycle, and potential margin pressure.
Read More
TSMC’s Q4 2025 earnings served as a powerful catalyst for renewed market confidence in the AI investment narrative. A net profit of NT$505.7 billion—35% higher YoY—and revenue of NT$1.046 trillion (~US$33 billion), up ~20–21%, substantially cleared analyst expectations. ([reuters.com](https://www.reuters.com/world/china/tsmc-q4-profit-jumps-35-record-beats-expectations-2026-01-15/?utm_source=openai)) These results are underpinned by surging demand for high‐performance computing and AI‐related chip production, particularly the most advanced nodes like 3nm and 5nm. ([investors.com](https://www.investors.com/news/technology/tsm-stock-taiwan-semiconductor-q4-2025-earnings/?utm_source=openai))
Critically, TSMC’s guidance for 2026 reflects bullishness: capex is being raised to US$52–56 billion (vs ~US$40 billion in 2025), and revenue growth is forecast around 30%. ([apnews.com](https://apnews.com/article/95de4082d5e36a3c0a0b00f613a5df39?utm_source=openai)) The capex increase not only speaks to production expansion but also to supply chain leverage—companies supplying tools, materials, and downstream product makers are likely to benefit materially. ([marketwatch.com](https://www.marketwatch.com/story/tsmc-breaks-big-revenue-milestone-in-thumping-fourth-quarter-raises-guidance-on-revenue-and-ai-capex-for-2026-cac934a4?utm_source=openai))
The market reaction was immediate and sector‐wide. TSMC’s shares rose over 5–6% in U.S. trading; ASML, KLA, Applied Materials and others saw 7–9% gains. Broader indices like Nasdaq and tech sectors rallied, though financials and energy lagged, constrained by oil price softness and interest rate uncertainty. ([marketwatch.com](https://www.marketwatch.com/story/tsmc-breaks-big-revenue-milestone-in-thumping-fourth-quarter-raises-guidance-on-revenue-and-ai-capex-for-2026-cac934a4?utm_source=openai))
Strategically, the situation provides several implications: first, AI hardware demand is proving more durable than many feared as 2025 ended; second, companies with exposure to advanced semiconductor nodes and critical foundry relationships (e.g. Nvidia, AMD, Apple) are likely to continue enjoying tailwinds; third, market risk centers around policy (export controls, subsidies), margin compression, and over‐capacity as capex intensifies. Open questions include the strength of demand beyond hyperscalers, global supply chain and geopolitical exposure, and whether valuations for smaller players can hold up as growth expectations become embedded.
Supporting Notes
- Net profit Q4 2025: NT$505.7 billion (~US$16.0 billion), up ~35% YoY. ([reuters.com](https://www.reuters.com/world/china/tsmc-q4-profit-jumps-35-record-beats-expectations-2026-01-15/?utm_source=openai))
- Revenue Q4 2025: NT$1.046 trillion (~US$33 billion), up ~20–21% YoY. ([apnews.com](https://apnews.com/article/95de4082d5e36a3c0a0b00f613a5df39?utm_source=openai))
- Capex for 2026 forecast: US$52–56 billion vs ~US$40.9 billion in 2025. ([apnews.com](https://apnews.com/article/95de4082d5e36a3c0a0b00f613a5df39?utm_source=openai))
- 2026 revenue growth outlook: approximately 30% YoY. ([barrons.com](https://www.barrons.com/articles/tsmc-taiwan-semi-earnings-stock-price-8ccafaeb?utm_source=openai))
- Gross margin in Q4 2025: 62.3%. ([ft.com](https://www.ft.com/content/a3b4c1ac-f26a-44bd-a605-25603b2a0669?utm_source=openai))
- Strong demand in advanced nodes (3nm, 5nm, 7nm), with advanced technologies constituting ~77% of wafer revenue. ([investors.com](https://www.investors.com/news/technology/tsm-stock-taiwan-semiconductor-q4-2025-earnings/?utm_source=openai))
- Stock market impact: TSMC U.S.‐listed shares rose 5–6%, ASML, KLA, Applied Materials, Micron, Broadcom, etc., saw gains 7–9%. ([marketwatch.com](https://www.marketwatch.com/story/tsmc-breaks-big-revenue-milestone-in-thumping-fourth-quarter-raises-guidance-on-revenue-and-ai-capex-for-2026-cac934a4?utm_source=openai))
- Wider market reaction: S&P 500, Nasdaq, negative drag from energy and some financials; Treasury yields and oil prices affecting sentiment. ([apnews.com](https://apnews.com/article/10049feb11f3a6bf7b2a79f1ad997edc?utm_source=openai))