Taiwan Semiconductor reported a fourth-quarter net profit of $16 billion, marking a 35% increase compared with the same period a year ago. Revenues rose by 25.5% year-over-year to approximately $18.5 billion, driven primarily by robust demand for advanced-node chips used in AI data centers and high-performance computing applications. Gross margins expanded by 2 percentage points to exceed 55%, reflecting improved capacity utilization at the company’s 5-nanometer and 3-nanometer fabs.

The company unveiled plans to boost capital expenditures to between $52 billion and $56 billion in 2026, up from roughly $30 billion in 2025. This increase underscores management’s conviction in the multi-year AI megatrend and is aimed at accelerating the ramp of its 3-nanometer and upcoming 2-nanometer production lines. The expanded spend will also fund advanced packaging facilities and initial stages of an overseas fab, though the latter is expected to introduce modest margin headwinds over the medium term.

Looking beyond 2026, Taiwan Semiconductor projects a compound annual revenue growth rate of approximately 25% through 2029, driven by sustained high-performance compute demand and network infrastructure build-outs. For fiscal 2026, the company has guided for roughly 30% year-over-year revenue growth, with AI-related shipments expected to account for more than 40% of total sales by the end of that year. Management emphasized ongoing capacity constraints as both a challenge and a pricing lever that will help preserve near-term profitability.