TSMC Profit Jumps 58% as CEO Calls AI Demand ‘Endless’

The world’s most important chipmaker raised its 2026 revenue forecast and described AI demand as “endless,” the cleanest read yet on whether the industry’s capital-spending cycle is still accelerating.

Taiwan Semiconductor reported a 58% jump in first-quarter profit Thursday, the fourth consecutive record quarter for the company that fabricates nearly every leading-edge AI chip.

Revenue for the three months ending March 31 came in at NT$1.134 trillion (New Taiwan dollars), or about $35 billion in U.S. dollars, beating consensus estimates of NT$1.127 trillion (about $34.8 billion). Net income hit NT$572.48 billion (about $17.7 billion), well ahead of the NT$543.32 billion (about $16.8 billion) analysts had forecast. Shares of the American depositary receipt (TSM) climbed in premarket trading.

The headline numbers matter, but the forward guidance matters more. Chairman and CEO C.C. Wei told analysts on the earnings call that the company now expects full-year 2026 revenue growth “above 30%” in U.S. dollar terms, up from the previous target. Capital expenditure is trending toward the upper end of the $56 billion guidance range. Second-quarter revenue is projected at $39 billion to $40.2 billion.

How the Number Breaks Down

The mix inside the quarter is as important as the total. Advanced process nodes at 7 nanometers or below produced 75% of wafer revenue. The high-performance computing segment (HPC, the category that includes AI accelerators, data-center CPUs, and networking silicon) accounted for 61% of total revenue. Smartphone chips, long the company’s bread and butter, fell to 24%. That internal shift is the story of a company pivoting its factories toward the workloads driving the AI build-out.

Gross margin came in at 58.8%, inside the company’s guidance band. Operating margin hit 49.1%. Both metrics reflect TSMC’s ability to charge premium pricing on its most advanced nodes, where it has no direct rival at scale.

From Generative to Agentic AI

The most quoted line from Thursday’s call was Wei’s assessment of demand. “AI-related demand continues to be extremely robust. We see the demand as endless,” he told analysts, according to CNBC’s coverage. He framed the next leg of the cycle around a shift from generative AI (the image and text models consumers know, like ChatGPT) to agentic AI (systems that take autonomous action on a user’s behalf, such as booking flights or executing multi-step software tasks). Agentic systems consume more tokens per interaction and more compute per token, which translates directly into orders for TSMC’s foundry capacity.

That framing is the bullish read on the AI trade’s longevity. If each generation of models drives proportionally more inference compute, the capacity constraint sits with the foundries, not the model makers.

The Hyperscaler Capex Signal

TSMC’s results do not sit in isolation. On Tuesday, Meta announced an expanded partnership with Broadcom to co-develop multiple generations of its custom MTIA chips, committing to an initial 1 gigawatt of capacity (enough to power roughly 750,000 U.S. homes) on what will be Meta’s first 2-nanometer AI silicon. Those chips will be fabricated by TSMC. Broadcom (AVGO) shares have climbed about 21% over the last two weeks on the deal.

Meta is not alone. Nvidia, Apple, AMD, and Google’s TPU program all route their most advanced silicon through TSMC’s Taiwan and Arizona fabs. Every hyperscaler that commits to another gigawatt of custom compute is, in effect, booking wafer capacity at TSMC two to three years out. The Meta-Broadcom deal is the latest data point in a pattern that has been building for six quarters.

The Geopolitical Wildcard

Not every read-through is clean. ASML, the Dutch maker of extreme ultraviolet (EUV) lithography machines (the tools that etch features onto TSMC’s most advanced chips), reported a revenue beat on Wednesday but saw its stock fall 6% on concerns about proposed U.S. export restrictions on China-bound equipment. ASML CEO Christophe Fouquet told investors the 2026 guidance range “accommodates potential outcomes of ongoing discussions around export controls.” That is the kind of caveat that sits alongside TSMC’s bullish guidance for the next twelve months.

For TSMC itself, the geopolitical file stays open. Taiwan’s political status, U.S. CHIPS Act funding for the Arizona fabs, and Beijing’s policy toward the island all remain active variables. None of those came up in a meaningful way on Thursday’s call.

That makes this the fourth straight quarter TSMC has raised its full-year guidance. The pattern suggests the AI capex cycle has not yet peaked. Capacity, not demand, is the binding constraint.

What to Watch

Federal Reserve & Economic Calendar: March retail sales data lands Thursday morning, and the March housing starts report follows Friday. Fed Chair Jerome Powell speaks at the Economic Club of New York on Friday, his first public appearance since last month’s FOMC meeting.

Earnings: Netflix reports first-quarter results after the close on Thursday, the first Big Tech earnings of the cycle. Consensus is for $11.0 billion in revenue and 6.2 million net subscriber adds. Next week brings Tesla, Alphabet, and Intel.

Broader Market: The VanEck Semiconductor ETF (SMH) is the cleanest way to track the TSMC-adjacent read-through. Watch for whether the index can hold above its 50-day moving average following the print.