Taiwan Semiconductor Manufacturing Company (TSMC) is expected to report a record fourth-quarter net profit of T$475.2 billion (US$15.02 billion), marking a 27% year-over-year increase. This would represent the eighth consecutive quarter of profit growth for the world's largest advanced chip manufacturer.
The company's Q4 revenue already posted a 20.45% jump to NT$1.05 trillion, driven by full utilization of its cutting-edge 3-nanometre production capacity. This surge was powered by strong demand for AI server accelerators and Apple's A19 chip for the upcoming iPhone 17 series.
Analysts have significantly upgraded TSMC's 2026 revenue forecast. Research firm IDC now projects dollar-term revenue growth of 25-30% for 2026, up from a previous estimate of 22-26%. This bullish revision is primarily attributed to the "explosive growth" in the AI server accelerator manufacturing market, which IDC projects will expand by 78% year-over-year in 2026.
Galen Zeng, senior research manager at IDC, cited next-generation 2-nanometre node technology as a key contributor to the upgraded outlook. Citi analyst Laura Chen placed an "upside 30-day catalyst watch" on TSMC stock, maintaining a Buy rating with a NT$2,450 price target, expecting strong demand for advanced nodes and chip packaging to support growth into early 2026.
TSMC continues its aggressive expansion, with a $165 billion investment in chip factories in Arizona. U.S. Secretary of Commerce Howard Lutnick indicated the company plans further U.S. investment. However, some analysts, like Shay Boloor of Futurum Equities, express concern that faster overseas expansion could dilute margin gains expected from 2-nanometre technology and pricing advantages.
Bernstein raised its price target for TSMC to $330 from $290, increasing its estimate for the company's chip-on-wafer-on-substrate capacity to 125,000 wafers per month by the end of 2026. This capacity is expected to support major Nvidia projects, including the Blackwell and Rubin platforms.
While geopolitical factors such as potential U.S. tariffs under a Trump presidency pose a question mark, chips are currently excluded from the 20% tariff on Taiwan's exports to the U.S. Options traders anticipate a 5.34% stock move following the earnings announcement. TSMC is scheduled to report its official Q4 results and provide guidance at 0600 GMT on Thursday.
