Taiwan Semiconductor reported fourth-quarter revenue of $33.7 billion, a 26 percent increase year-over-year (21 percent in local currency), driven by strong AI-chip demand. Advanced nodes (7 nm and below) accounted for 77 percent of wafer revenue, up from 74 percent a year earlier, while the company’s newest 3 nm technology rose to 28 percent of total wafer revenue versus 26 percent. Gross margin expanded to 62.3 percent (up 330 basis points) and operating margin reached 54 percent (up 500 basis points), both exceeding prior guidance. High-performance computing end markets made up 55 percent of Q4 revenue, and smartphone applications contributed 32 percent, underscoring a balanced multi-segment growth profile.

Management raised its 2026 capital expenditure guidance to a range of $52 billion–$56 billion, well above the consensus expectation of just under $41 billion, citing sustained large-scale cloud and AI data center build-outs. For the first quarter, the company forecasts revenue between $34.6 billion and $35.8 billion, implying approximately 38 percent year-over-year growth at the midpoint. Full-year revenue is expected to increase by roughly 30 percent. With leading process-node market share and a forward price-to-earnings ratio below 21 times alongside a price/earnings-to-growth ratio of 0.7, the firm’s investment case is underpinned by both attractive valuation metrics and robust capacity expansion plans.