Taiwan Semiconductor Manufacturing (TSM.US), the world's largest manufacturer of advanced AI chips, is projected to report record-breaking results for a fourth consecutive quarter. Driven by persistently robust demand for artificial intelligence infrastructure, the company's net profit for the January-March period is expected to surge by 50% compared to the same period last year. The complete first-quarter results are scheduled for release on April 16.
Analysts highlight that demand for TSMC's 3-nanometer process technology, used to produce AI chips, and its advanced packaging solutions continues to outpace the company's available production capacity. This dynamic is propelling the Asian market's highest-valued company, a key supplier to Nvidia and Apple, to new heights. TSMC's market capitalization is now approaching $1.6 trillion, approximately double that of its South Korean rival, Samsung Electronics.
According to a consensus of 19 analyst forecasts compiled by LSEG SmartEstimate, which weights more accurate forecasters more heavily, TSMC is expected to announce a first-quarter net profit of NT$542.6 billion (approximately $17.1 billion) this Thursday. The company will hold an earnings conference at 14:00 Beijing Time, where it will provide guidance for the second quarter and updated full-year outlook. If the final net profit exceeds NT$505.7 billion, it will mark the highest quarterly net profit in the company's history and represent a ninth straight quarter of profit growth.
Year-to-date, TSMC's Taiwan-listed shares have climbed 28%, outperforming the broader market's 22% gain. The chipmaker's latest quarterly revenue, announced last Friday, showed a 35% increase, indicating stable global demand for AI chips during the initial weeks of the Middle East conflict. The company stated that revenue for the three months ending March reached NT$1.13 trillion ($35.6 billion), surpassing the average analyst estimate of NT$1.12 trillion. Sales in March alone grew by 45%.
Looking ahead, Arthur Lai, Head of Asia Technology Research at Macquarie Capital, noted in a client report, "Driven by continued strong AI demand and leadership in advanced processes, we anticipate a higher sequential revenue growth guide for the second quarter of 2026." While the Middle East situation poses potential threats to the supply of semiconductor production materials like helium and neon, the market believes TSMC is well-positioned to navigate any disruptions smoothly.
Galen Zeng, Senior Research Manager at IDC, pointed out, "TSMC's diversified procurement channels and safety stock should be sufficient to handle short-term interruptions." Zeng added that a key focus for the market is whether TSMC will maintain or increase its capital expenditure plan for 2026, as this reflects management's confidence in long-term AI demand. Currently, TSMC is investing $165 billion in building a chip fabrication plant in Arizona, USA. Furthermore, the company has revised its plans in Japan, shifting focus to local production of 3nm chips instead of concentrating on more mature processes.
In early April, J.P. Morgan released a research report on TSMC, previewing its first-quarter 2026 performance. The report anticipates a strong uptick in Q1 gross margins, driven by rising AI demand that will likely lead to further increases in capital expenditure. The bank raised its price target for TSMC to NT$2,400. J.P. Morgan believes TSMC's gross margins for Q1 and Q2 2026 will significantly exceed expectations, primarily due to continued tightness in 3nm capacity, high utilization rates, increased demand for expedited wafer orders, and a depreciating New Taiwan Dollar. The bank forecasts a 6%–8% sequential revenue growth for Q2 2026, with the upper limit constrained by 3nm capacity. It also stated that AI computing power demand is set to strengthen substantially over the next 2-3 months, creating unprecedented tightness for advanced process nodes. Revenue growth rates for both 2026 and 2027 are projected to exceed 30%, with 2026 growth primarily driven by supply constraints.
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