TSMC earnings 'shatter' forecasts
The world's largest manufacturer of advanced artificial intelligence (AI) chips saw a forecast-smashing 35% jump in fourth-quarter profit, hitting a record as it benefited from surging demand for semiconductors used in AI applications.
Fuelled by this AI demand, TSMC said it expected expenditure to reach between $52 and $56 billion in 2026, compared with $40.9 billion in 2025. Amid fears of the AI bubble bursting, these results point to continued strength in AI-related demand and suggest that fears of an imminent slowdown are premature.
Reacting to TSMC’s fourth quarter earnings report, Kate Leaman, chief market analyst at AvaTrade, offers the following comments:
“TSMC’s Q4 smash results are more than just a strong earnings print, they are a signal that the AI cycle is transitioning from purely narrative to infrastructure. The combination of record revenue, surging profits and its mix of advanced nodes underscores that TSMC has become the go-to operating system for AI compute.
“For TSMC itself, this quarter reinforces three themes: pricing power in leading-edge nodes, growing visibility on multi‑year AI capex from hyperscalers and chip designers, and a gradual broadening of demand beyond data centres into AI at the edge. The key question now is not whether AI sustains growth, but how TSMC sequences its global capacity build‑out and capital intensity without diluting returns.
“For the wider AI chip ecosystem, these numbers crystallise a hierarchy. Designers with access to TSMC’s most advanced processes can make the most of their advantage, while laggards face structurally higher barriers to entry and longer time‑to‑market. At the same time, the earnings highlight latent fragilities, including geopolitics, export controls and the concentration of leading‑edge manufacturing in a handful of geographies remain the industry’s unresolved tail risks.”
