TSMC’s Q4 Earnings Smash Expectations by 35%, Leaving Wall Street’s Bullish Calls in the Dust—Again

Another quarter, another earnings beat that makes analysts look like they're reading last year's playbook.

The Silicon Powerhouse That Can't Stop Winning

Forget beating estimates—TSMC just rewrote them. The foundry giant didn't just exceed Wall Street's already optimistic projections; it blew past them by a staggering margin. That thirty-five percent surge isn't just a number; it's a statement. While financial pundits were busy adjusting their models upward, TSMC's execution was already several moves ahead, delivering performance that turns bullish forecasts into cautious underestimates.

Execution Over Expectation

The real story here isn't in the predictions—it's in the process. While the street crunches numbers, TSMC crunches atoms, perfecting node technologies that competitors are still trying to blueprint. This quarter's results highlight a brutal efficiency that talkative analysts can't model. It's the quiet hum of a fabrication plant outperforming the noisy chatter of trading floors.

The Market's Reliable Engine

In a sector known for volatility and hype, TSMC operates with the relentless consistency of a metronome. Every smartphone craving more power, every AI model demanding more transistors—it all flows back to these foundational chips. The earnings report confirms what the tech world already knows: you can build castles in the air with software, but they all need to land on TSMC's silicon.

So while finance desks issue yet another round of upgraded price targets—a classic case of closing the barn door after the thoroughbred has already won the race—the real value is being manufactured, one wafer at a time, far from the spotlight of Wall Street's endless revision cycles.

AI and high performance chips drive quarterly results

TSMC continues to benefit from the surge in artificial intelligence hardware spending. The company produces advanced processors used by major clients such as Nvidia and AMD, and this work is now the main engine of its business. Its high performance computing unit, which includes AI and 5G products, made up the largest share of sales in the October to December period.

Advanced chips sized 7 nanometers or smaller accounted for 77% of total wafer revenue during the quarter. Smaller chip sizes allow faster speeds and better energy use, which is why customers keep ordering more of them.

“The demand for AI remains very strong, driving overall chip demand across the entire server industry,” Counterpoint Research senior analyst Jake Lai said. With TSMC’s ongoing 2nm capacity expansion and new production contributing to revenue, along with continuous expansion of advanced packaging… TSMC is expected to maintain strong performance in 2026.”

TSMC’s relationship with Apple, Qualcomm, and Nvidia

TSMC still gets a big share of its business from Apple’s iPhone and smartphones that run on Qualcomm’s high-end processors.

That exposure matters because the memory shortage is expected to hit phone sales hard in 2026, with Macquarie Capital predicting that global smartphone shipments will fall 11.6% year over year, which could weigh on volumes tied to mobile devices.

TSMC is also expected to play a central role in a coming US–Taiwan trade deal. As part of that process, the company is likely to commit to building more chip fabrication plants on American soil. That WOULD add to its existing plan to invest up to $165 billion in the US, one of the largest overseas manufacturing pushes in the semiconductor industry.

Outside the United States, TSMC is moving ahead with new factories in Japan and Germany. These projects are part of a broader push to spread production across key regions while keeping its most advanced chip development anchored in Taiwan.

On the demand side, Nvidia CEO Jensen Huang said this month that appetite for AI accelerators remains strong. His view lines up with comments from AMD CEO Lisa Su, who said demand for AI computing power and the number of users are still climbing.

The global rush to build AI data centers has turned into a spending wave of more than $1 trillion in planned investments. That surge has helped TSMC post over 30% annual sales growth over the past two years.

TSMC results landed on a mixed day for Asia Pacific markets. South Korea’s Kospi index rose 0.57%, while the smaller Kosdaq was flat. The won weakened about 0.2% to 1,466.6 per dollar. In Japan, the Nikkei 225 fell 1.05%, while Topix added 0.15%. Australia’s S&P/ASX 200 gained 0.46%. Hong Kong’s Hang Seng dropped 0.66%, and China’s CSI 300 slipped 0.42%.

Market data showed the ASX 200 at 8,861.70, up 41.10 points. The Hang Seng stood at 26,868.36, down 131.45 points. Japan’s Nikkei closed at 53,870.94, down 470.29 points. India’s Nifty 50 fell 0.26%, and Shanghai ended at 4,106.687, down 19.406 points.

The Japanese yen strengthened slightly to 158.34 per dollar after hitting an 18 month low earlier in the week.

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