Taiwan Semiconductor Manufacturing (TSM), or TSMC, reported better-than-expected revenue for the December quarter, easing fears that spending on AI infrastructure may be cooling. The results also support strong demand from key customers like Nvidia (NVDA), which relies on TSMC to make its most advanced chips.
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TSMC said fourth-quarter revenue rose roughly 20% year-over-year to roughly NT$1.05 trillion ($33 billion), beating analyst forecasts and coming in near the high end of its $32.2 billion to $33.4 billion guidance range.
AI and Data Centers Drive Growth
The strong results were largely driven by demand for data center and AI chips, where Nvidia remains one of TSMC’s biggest customers. Nvidia executives recently said AI demand remains solid, pushing back against concerns that data center buildouts may be moving faster than real-world AI use.
TSMC also likely benefited from steady demand from Apple (AAPL), helped by strong sales of the iPhone 17 launched last year.
A Key Winner of the AI Boom
TSMC has emerged as a major beneficiary of the AI boom, thanks to its key role in making advanced AI chips. Large tech companies such as Microsoft (MSFT) and Meta Platforms (META) are still spending heavily on data centers, which continues to support strong demand for high-end processors.
Still, some investors remain cautious that AI spending could overshoot actual demand. TSMC’s latest numbers suggest that, for now, AI-related orders remain strong.
What’s Next for TSMC
TSMC is set to report full quarterly earnings next week, along with an update on capital spending plans for 2026. Last year, the company said it would spend $40 billion to $42 billion in 2025 on expansion and upgrades.
Several brokerages, including JPMorgan Chase, have raised their price targets on TSMC in recent weeks, pointing to strong revenue growth and improving margins.
Is TSM a Buy, Sell, or Hold?
On Wall Street, TSM currently has a consensus Strong Buy rating, based on seven Buys, one Hold, and zero Sells. The average TSM price target of $324.29 per share indicates a consensus upside of 2%.
