Taiwan Semiconductor Manufacturing Company’s strong financial results provided a major boost to the artificial intelligence industry. TSMC on Thursday posted a 35% year-over-year profit increase in its fourth quarter, easily beating Wall Street expectations and setting a new record. The high-performance computing segment, which includes artificial intelligence and 5G applications, accounted for the majority of sales in the quarter. TSMC is the world’s largest dedicated contract chip manufacturer. It manufactures advanced AI chips designed by “fabless” companies like NVIDIA. TSMC’s customers include Nvidia, Broadcom, Advanced Micro Devices, and more. TSMC’s spending is expected to further increase due to continued demand for AI, and Wall Street sentiment towards the sector is rising. The company said it expects capital spending to reach $52 billion to $56 billion in 2026, compared to $40.9 billion in 2025. TSM 1Y Mountain Taiwan Semiconductor Manufacturing’s stock price performance over the past year. TSMC stock rose more than 5% on Thursday, bringing its year-to-date gain to about 13%. Several big-name chip stocks also rose during trading on the back of TSMC’s explosive results. Nvidia and Broadcom rose more than 3% and 1%, respectively, and the VanEck Semiconductor ETF (SMH) hit a new 52-week high. TSMC’s performance boosts other AI-related moves Wall Street analysts not only reiterated their bullish ratings on TSMC, but also raised their outlook on other AI-related moves that the chipmaker’s business could support. Wells Fargo analyst Aaron Lakers said Thursday on CNBC’s “The Exchange” that TSMC’s results showed “broad-based strength” as the company upgraded its AI accelerator growth forecast from 2024 to 2029. “This speaks to the strength we continue to see in building AI infrastructure… We are moving from a heavy AI training investment cycle to inference that is starting to become pervasive, and that is supporting the chip sector,” he said. Lakers updated Broadcom’s rating to overweight and named AMD a top pick for 2026 on Thursday morning as the company remains positive on semiconductor sales growth and data center computing demand. Wedbush Securities analyst Matt Bryson maintained his Outperform rating on TSMC, but cited Nvidia, Broadcom, and C3.ai as stocks that also derived from the results. “The strong outlook for the first quarter, the strong outlook for 2026, and the expectations for five-year AI accelerators (compound annual growth rate) necessarily imply solid recurring orders for these vendors,” he said. Like Wedbush, JPMorgan and Barclays reiterated their Outperform and Overweight ratings on TSMC following the TSMC report. Bank of America, UBS, and Needham each maintained their buy ratings. JPMorgan analyst Gokul Hariharan said TSMC’s report reflects significant improvement in gross margins and growing confidence in AI computing over the long term. “TSMC has fully embraced this AI upcycle, signaling that it is responding to repeated customer demand for cutting-edge capacity increases with strong capex increases (capex in 2026E is 3% higher than in 2025). “This also highlights growing confidence in AI demand in the coming years,” he said in a note to clients on Thursday. “We think the stock will continue to rise with good[gross margins]and strong growth in 2026 and 2027.” Similarly, Barclays analyst Simon Coles looked at TSMC’s performance and pointed to the company’s bullish view on AI industry demand. “Management also provided reassurance on concerns about an AI bubble, in the sense that management at least believes the demand is real and is confirming details directly with customers and customers’ customers. Overall, this is another strong result that further supports the semiconductor industry’s positive stance on AI,” he said in a note. TSMC is an overweight pick in the semiconductor group by Coles, largely due to the company’s strong expectations for earnings growth this year.
