TSMC (TSM) Stock: 58% Profit Jump and Record Q2 Forecast on AI Demand

TLDR

• TSMC posted a 58% jump in Q1 profit, hitting NT$572.48 billion — a fourth straight quarterly record.
• Revenue came in at NT$1.134 trillion (~$35B), beating LSEG SmartEstimate forecasts.
• Advanced chips (7nm or smaller) made up ~74% of wafer revenue; sub-3nm accounted for 25%.
• Q2 revenue guidance of $39B–$40.2B would mark another historic high, up ~10% sequentially.
• Full-year 2026 revenue growth is forecast at over 30% year-over-year in USD terms.

Taiwan Semiconductor Manufacturing Company delivered another record quarter, posting a 58% surge in net profit for Q1 2026. Net income hit NT$572.48 billion ($18.2 billion), beating analyst estimates and extending a streak of eight consecutive quarters of double-digit profit growth.

Revenue reached NT$1.134 trillion (~$35 billion), also above consensus forecasts. This marked the fourth straight quarter of record profits for the world’s largest contract chipmaker.

Taiwan Semiconductor Manufacturing Company Limited, TSM

TSMC’s high-performance computing segment, which covers AI and 5G applications, climbed to 61% of total revenue in the quarter. That’s the company’s biggest revenue driver by some distance.

Advanced chips — those built at 7 nanometers or below — accounted for around 74% of total wafer revenue. Sub-3nm chips alone made up 25% of sales, up sharply from just 6% in Q3 2023.

Nvidia, now TSMC’s largest customer, depends on the company for its AI processors. Apple remains another major client. Both relationships have helped sustain demand even as the broader tech environment stays unpredictable.

Record Q2 Guidance

TSMC guided Q2 2026 revenue between $39 billion and $40.2 billion. That would be another record quarter, up roughly 10% from Q1 and compared to $30.1 billion in Q2 2025.

Full-year 2026 revenue growth is expected to exceed 30% in USD terms — a projection that will likely reinforce investor confidence after recent uncertainty linked to the Iran war and broader geopolitical tensions.

On that front, TSMC said it does not expect near-term operational disruptions from Middle East conflict, despite concerns about helium and hydrogen supply chains used in chip production. The company said it has safety stock of specialty chemicals and gases in place.

Capital expenditure guidance was also updated. TSMC had previously flagged capex of $52 billion to $56 billion for 2026 — a rise of up to 37%. It now expects spending to land at the high end of that range.

Expansion in the U.S. and Japan

TSMC is investing $165 billion to build chip factories in Arizona. The company is also expanding in Japan, where it has updated plans to manufacture 3-nanometer chips rather than focusing on older technology nodes.

A new advanced chip fabrication plant is also being added in Tainan, Taiwan, as part of the company’s global capacity buildout.

TSMC’s Taipei-listed stock has gained 35% year-to-date, ahead of the broader market’s 28% rise. Its market cap now stands at roughly $1.7 trillion — nearly double that of Samsung Electronics.

Ahead of Thursday’s results, TSMC stock closed up 0.2% at a record T$2,085.

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