Taiwan Semiconductor Manufacturing Co. (TSM), the world’s largest chipmaker, reported a record first quarter, reflecting strong demand for its AI chips. Following the results, TSMC shares hit new record highs on the Taiwan Stock Exchange today, signaling a very strong start before the U.S. market even opens.
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TSM Reports Record Quarter Driven by AI Demand
For the quarter ended March 31, 2026, TSMC reported a massive jump in both its top and bottom lines.
Revenue reached NT$1.134 trillion ($35.76 billion), up 35.1% year-over-year, and crossing the NT$1 trillion mark for the first time. Meanwhile, net profit climbed to NT$572.5 billion ($18.2 billion), marking a 58% increase from last year. This resulted in a diluted EPS of NT$22.07 ($3.51 per ADR), comfortably beating analyst estimates.
Margins also remained strong, with gross margin coming in at around 64%–65%, reflecting the company’s pricing power in advanced chips.
AI and Advanced Chips Lead the Way
The main driver behind this performance was TSMC’s High-Performance Computing (HPC) segment, which includes chips used in AI servers and data centers. Advanced chips made using 7nm and smaller processes now contribute more than 75% of total wafer revenue. This highlights how quickly demand is shifting toward high-end chips used in AI workloads.
TSMC also confirmed that it is ramping up its 2nm phase, with mass production already active at its plants in Hsinchu and Kaohsiung. These next-generation chips are expected to play a major role in growth over the next two years.
Management Outlook Points to Strong 2026
Management remains confident about the rest of the year, supported by strong AI demand.
For Q2, TSMC expects revenue in the range of $39.0 billion to $40.2 billion, which implies a high single-digit increase from the $35.7 billion reported in Q1. For the full year, the company is maintaining its forecast of around 30% revenue growth.
TSMC is also holding its 2026 capital spending plan at $52 billion to $56 billion, with roughly 80% allocated to advanced technologies such as 3nm and 2nm.
What Is TSM’s Stock Price Target?
According to TipRanks, TSM stock has a Strong Buy consensus rating based on four Buys assigned in the last three months. At $440.25, TSMC’s average stock price target implies an upside of 17.37% from the current level.
The Bottom Line
TSMC’s latest results show that demand for AI chips remains strong. With record profit, strong revenue growth, and continued investment in next-generation technology, TSMC is well positioned to benefit from the ongoing AI boom, even as costs remain a factor to watch.