Taiwan Semiconductor (TSM) stock is poised to set a record for the fourth straight quarter on AI demand

TLDR

• TSMC is expected to report its fourth straight quarter of record profits on Thursday, with net earnings expected at NT$542.6 billion (about US$17.1 billion).
• This would represent an approximately 50% increase in net profit year over year for the first quarter of 2026.
• Bank of America raised its price target from $470 to $500, while maintaining a buy rating.
• Q1 revenue actually came in ahead of expectations, up 35% year over year.
• Taipei-listed TSMC shares have risen 28% year to date, outpacing the broader market’s 22% gain.

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TSMC heads into Thursday’s earnings report with momentum. Analysts expect the chipmaker to post net profit of NT$542.6 billion (US$17.1 billion) for the first quarter of 2026 — a nearly 50% jump from the same period last year.

Taiwan Semiconductor Manufacturing Co., Ltd., TSM

This figure comes from LSEG SmartEstimate, which measures the forecasts of analysts with the strongest records. Any result exceeding NT$505.7 billion would be TSMC’s highest quarterly net income ever.

It will also mark the ninth straight quarter of earnings growth.

TSMC He already gave investors a preview last week. The company reported first-quarter revenues rose 35% year-over-year — which exceeded analysts’ expectations.

Demand for TSMC’s 3-nanometer chips and its advanced packaging technology continues to exceed what the company can currently produce. Building AI infrastructure is the main driver.

TSMC’s market capitalization is now about $1.6 trillion – nearly twice that of Samsung Electronics. Its Taipei-listed shares have risen 28% so far this year, outpacing the broader market’s 22% gain.

Bank of America raises its price target to $500

On April 12, Bank of America Securities raised its price target TSM From $470 to $500, keeping the Buy rating in place. The company expects sales to grow 7% to 9% quarter-on-quarter in the second quarter, driven by high-performance computing orders.

Bank of America also expects gross margins to expand from the 63% to 65% range in the first quarter to about 66% in the second quarter.

Arthur Lai, head of Asia technology research at Macquarie Capital, said he expects TSMC to guide higher quarter-on-quarter revenue growth in the second quarter – citing continued demand for artificial intelligence and the company’s leadership in advanced node manufacturing.

There’s one thing investors will be watching closely on Thursday: whether TSMC will maintain or raise its 2026 capital spending plans. This number is seen as an indication of how confident management is in the demand for artificial intelligence in the long term.

TSMC is currently investing $165 billion to build chip factories in Arizona. It has also updated its plans in Japan, moving from mature nodes to full production of 3nm technology there.

Rating flags worth watching

Not everything is a clean green light. GuruFocus puts TSMC’s intrinsic value at $280.17, which makes the current price of $370.60 appear overvalued by about 32% on this metric.

The stock’s P/E ratio is 30.19 times – well above the five-year average of 22.55 times.

However, GuruFocus gives TSMC a GF score of 98 out of 100, with perfect 10/10 marks for both profitability and growth. Financial strength comes in at 9/10.

Insider activity over the past three months shows a modest $709,180 in purchases and zero recorded sales.

On the supply side, the war in the Middle East has raised some concerns about outages in semiconductor materials such as helium and neon. IDC’s Galen Zeng said TSMC’s diversified sources and safety stock should be sufficient to handle short-term disruptions.

TSMC’s earnings call is scheduled for 0600 GMT on Thursday, where the company will also issue guidance for the second quarter and updated full-year forecasts.