In 2025, Taiwan Semiconductor Manufacturing Company delivered a milestone performance, generating NT$4.1 trillion (US$122.4 billion) in revenue—a 36 percent increase year-over-year and its first time surpassing the US$100 billion threshold. This surge was driven by unrivaled demand for advanced AI processors, where TSMC commands over 95 percent global market share. Efficiency gains contributed to margin expansion: gross margin rose from 56.1 percent in 2024 to 59.9 percent in 2025, while operating margin climbed from 45.7 percent to 50.8 percent. In Q4 alone, TSMC posted a 62.3 percent gross margin and a 54 percent operating margin, underscoring its pricing power and superior yield rates on cutting-edge 3 nm and 5 nm nodes.

Since the start of 2025, TSMC’s share price has appreciated by approximately 69 percent on expectations of continued AI investment, yet it still trades at just 25 times forward earnings—below peers such as Broadcom and Nvidia. Analysts forecast earnings per share to increase from NT$10.65 in 2025 to NT$13.05 in 2026, a 23 percent jump, supported by a sales growth outlook of around 30 percent. With a dividend yield near 0.9 percent and gross margins sustained near 60 percent, TSMC offers a blend of growth and income that remains compelling for long-term investors.

To support the AI super-cycle, TSMC has committed to a US$52–56 billion capex budget for 2026, up from US$46 billion in 2025. This investment underwrites capacity expansions at its Hsinchu and Kaohsiung fabs, accelerates the ramp of 2 nm production in Taiwan and the new Arizona Fab 2, and increases advanced packaging throughput—from 75,000 to 120,000 wafers per month on CoWoS by year-end. Management’s guidance of nearly 30 percent revenue growth for 2026 assumes this capex will meet surging AI GPU and custom accelerator orders, positioning TSMC to sustain top-line growth above 25 percent through 2029.