Taiwan Semiconductor Manufacturing (TSM) reported first-quarter 2026 net profit of NT$572.5 billion ($18.2 billion), a 58% increase from the prior year and well above the LSEG SmartEstimate of NT$543.3 billion. Revenue reached NT$1.134 trillion ($35 billion), up 35% year-over-year and topping forecasts of NT$1.127 trillion, according to CNBC and Reuters reports.

This marks the company's fourth straight quarter of record profits, fueled by unrelenting demand for AI chips. Advanced nodes of 7 nanometers or smaller accounted for 74% of wafer revenue, with 3-nanometer technology—critical for high-performance AI processors—contributing 25% of total revenue, up sharply from 6% in Q3 2023.

TSMC, the world's largest contract chipmaker and key supplier to NVIDIA (NVDA) and Apple, saw its 3nm production utilization exceed 100%, supported by premium pricing amid AI shortages. One source noted a gross margin of 66.2%, with net profit equivalent to €15.3 billion.

The results underscore TSMC's dominance in leading-edge semiconductors. Demand for its 3nm chips and advanced packaging outpaces capacity, driving eight consecutive quarters of double-digit profit growth. Despite Middle East tensions potentially disrupting neon and helium supplies, analysts view TSMC as resilient.

Capex plans remain at $52-56 billion for 2026, up to 37% from 2025's $40.9 billion, funding factories in Arizona ($165 billion total investment) and upgraded 3nm production in Japan.

Post-results, BofA Securities raised its price target to NT$2,530 from NT$2,360, maintaining Buy. Aletheia Capital lifted to $600 from $500, citing capacity expansions. Consensus remains Buy, with an average target of NT$2,100 versus the current NT$1,780—implying about 18% upside.

TSMC shares, up 35% year-to-date, trade near records. As a major ASML customer, strong results bode well for the chip equipment sector amid sustained AI infrastructure buildout.