In the fourth quarter, TSM reported revenue of $33.7 billion, a 26% year-over-year increase (21% in local currency), driven by robust demand for advanced nodes. Revenue from process technologies at 7 nm and below rose to 77% of total wafer sales, up from 74% a year earlier, while its newest 3 nm node contributed 28% of wafer revenue. Gross margin expanded by 330 basis points to 62.3%, and operating margin climbed 500 basis points to 54%, both figures exceeding prior guidance ranges of 59%–61% for gross margin and 49%–51% for operating margin.

TSM raised its 2026 capital expenditure forecast to $52 billion–$56 billion, far above the prior consensus of roughly $41 billion. This increase underscores the company’s commitment to expanding capacity for high-performance computing and AI data centers. Management noted that leading cloud service providers have signaled sustained spending, fueling a surge in order volumes for 3 nm and 5 nm nodes. The increased investment will also support planned fab expansions in Taiwan and overseas, ensuring TSM can meet accelerating demand for advanced AI chips.

For the first quarter, TSM projects revenue between $34.6 billion and $35.8 billion, implying approximately 38% year-over-year growth at the midpoint. Full-year revenue growth is expected to be around 30%. At current consensus estimates, the stock trades at a forward P/E below 21 and a forward PEG ratio of 0.7, levels that analysts regard as undemanding given the company’s technology leadership and secular AI growth drivers.