TSMC — the company that manufactures 9 out of 10 advanced AI chips worldwide — reported quarterly results on Thursday that beat even the most optimistic analysts. The record profit of $18 billion marks the eighth consecutive quarter of double-digit earnings growth.
The Numbers
Revenue: $35.9 billion — up 35% year-over-year and at the high end of its own guidance. Earnings per share: NT$22.08 (US$3.49 per ADR), significantly above the expected NT$20.88. Gross margin: 66.2% — historically high. Operating margin: 58.1%. Net margin: 50.5%.
Every second dollar of revenue becomes profit. That’s a level of profitability other companies can only dream of.
Why These Numbers Matter
TSMC isn’t just any chip company. It’s the firm that produces chips for NVIDIA, Apple, AMD, Qualcomm, and virtually every AI-relevant chip in the world. When TSMC reports strong numbers, it’s an indicator for the entire tech industry.
This quarter’s message: AI demand isn’t just intact, it’s accelerating. CEO C.C. Wei spoke of “strong signals and a positive outlook from customers” and a “multi-year AI growth trend.” Capacity is fully booked for 2026 — customers are competing just to secure production slots.
The Outlook
TSMC raised its full-year guidance to over 30% revenue growth in US dollar terms. For Q2, the company expects $39-40.2 billion — another 10% sequential increase. Capital expenditure is coming in at the top of the $52-56 billion range.
Aletheia Capital raised its price target to $600. The stock currently trades around $376.
What This Means for the Rest of the Sector
TSMC’s results are a leading indicator for NVIDIA (main customer), AMD, Broadcom, and the entire semiconductor sector. When TSMC is “sold out,” it means:
NVIDIA can’t ramp its GPU production fast enough — demand continues to significantly exceed supply. AMD benefits as TSMC’s second-largest customer from the same dynamic. Apple has its newest chips (A18, M5) in production at TSMC on 3nm technology. The Semiconductor ETF (SOXX) just posted 11 consecutive winning days.
Paradoxically, TSMC stock fell slightly after the results — a classic “sell the news” on a stock already up 29% this year. This is a buying opportunity, not a warning signal.
Risks
The Iran conflict threatens energy supply chains and critical manufacturing materials like helium and hydrogen. TSMC said in its earnings conference that it doesn’t expect any near-term impact — but a prolonged conflict could affect global chip production.
Additionally, the entire AI thesis stands and falls with the question of whether companies can convert their massive AI investments into actual revenue. So far the direction is right — but proof is still pending for many use cases. Track the market daily with our Fear & Greed Index.
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