Taiwan Semiconductor Manufacturing posted 36% year-over-year revenue growth in 2025, reaching approximately $122 billion in sales. Management is guiding for a further 30% increase in 2026, supported by sustained spending from hyperscale cloud providers and AI platform developers. Hyperscaler commitments alone amount to several hundred billion dollars of incremental AI investment over the next three years, underpinning TSMC’s outlook.

In the fourth quarter of 2025, TSMC’s gross margin expanded to 62.3% from 59.0% a year earlier, while operating margin climbed to 54.0% from 49.0%. Management expects first-quarter 2026 gross margins of 63–64% and operating margins of 54–56%, reflecting ongoing efficiency gains in advanced-node production. The company generated operating cash flow exceeding $50 billion in 2025, enabling a robust capital return program and reinvestment in cutting-edge capacity.

TSMC invested $41 billion in capital expenditures during 2025, with 58% of revenue coming from high-performance computing and AI chip production. Capex is being increased to roughly $54 billion in 2026, with 70–80% earmarked for advanced process technologies (7 nm and below). This level of investment is more than double that of any peer foundry, reinforcing TSMC’s technology edge and capacity to meet surging global demand for next-generation semiconductors.

Among 49 covering analysts, 98% rate TSMC shares as a buy, with an average 12- to 18-month upside of 25%. Wall Street consensus projects 2026 earnings per share of $13.05, up 23% from $10.65 in 2025, and 31% sales growth in line with management guidance. Trading at a forward price-to-earnings multiple of 31, TSMC’s valuation remains attractive given the company’s double-digit growth profile and dominant market share in advanced semiconductor fabrication.