TSMC Stock Rallies Premarket on Q4 Beat and Massive 2026 Capex Increase

Taiwan Semiconductor Manufacturing Company Limited (TSM) shares surged 5.76% in premarket trading to $345.98 as of 5:21:26 AM EST on January 15, 2026, following the chipmaker’s announcement of record fourth-quarter earnings that significantly exceeded analyst expectations. The world’s largest contract chipmaker reported net income of NT$505.74 billion (US$16.01 billion) for Q4 2025, representing a 35% year-over-year increase and beating the LSEG SmartEstimate of NT$478.4 billion.

The strong results were driven by robust demand for advanced semiconductors used in artificial intelligence applications, with the company also unveiling plans to increase capital spending substantially in 2026.

AI Chip Demand Powers a Major Q4 Beat

TSMC’s fourth-quarter revenue reached NT$1,046.09 billion (US$33.73 billion), marking a 20.5% increase year-over-year and a 5.7% sequential gain from Q3 2025. The company’s profitability metrics were particularly impressive, with gross margin expanding to 62.3%, operating margin reaching 54.0%, and net profit margin hitting 48.3%.

Earnings per share came in at NT$19.50 (US$3.14 per ADR unit), substantially above the analyst estimate of NT$14.45 and representing a 35% increase from the prior year period.

Advanced process technologies continued to dominate TSMC’s revenue mix, with 3-nanometer chips accounting for 28% of total wafer revenue, 5-nanometer representing 35%, and 7-nanometer contributing 14%. Combined, advanced technologies defined as 7-nanometer and below accounted for 77% of total wafer revenue, underscoring the company’s leadership in cutting-edge semiconductor manufacturing for AI and high-performance computing applications.

The strong demand from customers including Nvidia and Apple has positioned TSMC as a critical enabler of the ongoing AI boom.

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TSMC Plans Aggressive Expansion to Support AI Chips

Looking ahead to 2026, TSMC management provided optimistic guidance with first-quarter revenue expected between US$34.6 billion and US$35.8 billion, representing continued sequential growth. Gross profit margin is projected at 63-65% and operating profit margin at 54-56%, both indicating sustained strong profitability.

The company’s confidence in long-term demand is perhaps best reflected in its capital expenditure plans, with management announcing a 2026 capex budget of US$52-56 billion, potentially representing an increase of up to 40% from prior levels.

This substantial capital investment will support TSMC’s expansion plans, including the development of additional manufacturing facilities in the United States and continued capacity additions in Taiwan. The company’s Senior VP and CFO Wendell Huang emphasized that the business entering Q1 2026 would be “supported by continued strong demand for our leading-edge process technologies.”

With 305 distinct process technologies deployed and serving 534 customers in 2025, TSMC’s market position remains unparalleled in the semiconductor foundry industry, and the market’s positive premarket reaction reflects investor confidence in the company’s AI-driven growth trajectory.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.