TSMC erupts higher on AI heat, blows past Q4 and opens the spending taps
Taiwan Semiconductor shares are ripping today. The chip maker crushed Q4, then stunned the Street with a big 2026 spending plan. The stock is trading around 343.55, with an intraday high near 349.99 and a low around 337.53 as of 14:46:59 UTC. This move is pulling the entire semiconductor complex higher. Investors are leaning into an AI infrastructure supercycle that now looks even larger and longer. 🚀
The print that moved markets
TSMC posted a record quarter and the details matter. Profitability came in strong, and the mix is skewing even more to advanced nodes. That is code for AI chips and the high end of smartphones.
- Q4 net income: NT$505.74 billion, beating estimates
- Revenue: NT$1,046.09 billion
- Margins: gross 62.3 percent, operating 54.0 percent, net 48.3 percent
- Advanced nodes at 7 nanometers and below: 77 percent of wafer revenue
Those margins tell you pricing power is real. The mix toward 3 nanometers and 5 nanometers is widening the moat. The company also flagged a steady ramp to 2 nanometers. That technology underpins next generation AI accelerators and top mobile chips. In plain terms, TSMC is selling what the world cannot get enough of.
A capex shock, and why it matters
Management raised the 2026 capital budget to a massive 52 to 56 billion dollars. That is up from roughly 40.9 billion dollars in 2025. This is a capacity statement. It says orders are firm, pricing is strong, and customers want secure supply at the leading edge.
This spend points to more EUV tools, more advanced packaging, and more cleanroom space. It also implies deeper ties with top AI customers. Think of GPUs for data centers and cutting edge phone chips. The 2 nanometer ramp needs huge investment. Today’s guide shows TSMC is building for it.
Big capex in semis often arrives 12 to 24 months before big revenue. Capacity builds set up the next leg of growth.
The AI buildout, in plain view
Data center operators want more compute. Model sizes keep rising. That pushes demand for advanced chips and advanced packaging. TSMC sits at the choke point for both. Its tools, processes, and yield gains remain hard to match. When the leader spends this much, suppliers listen, customers plan, and investors reprice the group.
Ripple effects across the market
I am seeing strength across equipment makers and chip peers. Names tied to lithography, deposition, etch, and packaging are catching bids. That includes leading tool vendors and advanced packaging plays. The read is simple. If TSMC is building, their order books will swell.
Options desks are busy too. Alongside upside calls, there are large blocks of puts trading. That looks like profit protection and event hedging. After a run to a trillion dollar market cap earlier this month, some investors are locking in gains while letting stock exposure ride.
Momentum is high and liquidity is deep, but swings can get sharp. Size positions with care, and know your exit levels.
Valuation, risks, and the path ahead
Great businesses can get expensive in great cycles. TSMC now trades at an elevated multiple after the rally. The earnings beat softens that, but the bar has risen. The company’s margin profile is outstanding. The cash generation funds that giant capex and still leaves room for returns. The risk is that perfection is priced in.
Watch these pressure points:
- 2 nanometer execution, timing, and yields
- Supply chain for EUV tools and advanced packaging
- Customer concentration and order visibility
- Geopolitics and onshore build costs
On balance, the setup favors the bulls. Advanced node demand is tight. AI accelerators, networking chips, and high end phones need cutting edge supply. TSMC is expanding capacity into firm demand, not hope. Equipment suppliers should benefit as orders convert. Peers at older nodes will feel the gap widen.
Investment take
For long term investors, the thesis is intact and stronger. Earnings power is rising with mix and scale. The capex surge supports multi year growth. For traders, the stock is extended but supported by numbers. Pullbacks are likely to get bought, yet hedges make sense given the speed of the move.
The bottom line
TSMC just validated the AI infrastructure boom with hard numbers and harder dollars. The quarter beat, margins dazzled, and the 2026 spend anchors a new capacity wave. Semicap suppliers rally, peers reprice, and investors lean back into the supercycle. Valuation is no longer a secret, but the company keeps earning it. If the 2 nanometer ramp stays on track, today’s breakout is not the end of this story, it is chapter two.
