Taiwan Semiconductor Manufacturing Company (TSMC) has delivered a stunning financial performance for the first quarter of 2026, with net profit skyrocketing 58% year-on-year to T$572.5 billion ($18.2 billion), marking its eighth consecutive quarter of exceeding analyst forecasts. The semiconductor giant's revenue surged 35% to NT$1,134.1 billion, prompting an upward revision of its full-year growth outlook to over 30% in dollar terms. To meet relentless demand, TSMC announced it will deploy capital expenditure at the top end of its $52-$56 billion range for 2026, aggressively funding new fab construction and production capacity expansion.

AI demand remains strong despite global tensions

“Our conviction in the multi-year AI megatrend remains high, and we believe the demand for semiconductors will continue to be very fundamental,” Chief Executive C.C. Wei told analysts during an earnings call.

Wei acknowledged concerns about global economic uncertainty from the Middle East conflict but said demand related to AI technology has been “extremely robust.” Production capacity remains very tight across the company’s operations, he added.

The company supplies chips to Nvidia, which designs processors that power AI systems. At a recent industry conference, Nvidia CEO Jensen Huang revealed orders for the company’s products have reached into the trillions of dollars, far exceeding annual revenue.

TSMC is expanding its capacity to make 3-nanometer chips used in AI processors. The expansion includes facilities in Taiwan, the United States, and Japan, allowing the company to produce much larger quantities by 2027 and 2028. The U.S. expansion involves a $165 billion investment in chip factories in Arizona, one of the largest foreign investments in American manufacturing.

Ben Barringer, who heads technology research at Quilter Cheviot, said the results showed more than just strong revenue. “We are also seeing really strong margins and high utilization. Essentially, TSMC’s fabs are running hot, and the AI story just keeps delivering,” he said.

Taiwan’s stock market overtakes UK

The performance has pushed Taiwan’s stock market past the United Kingdom in total value, according to Bloomberg dataset. Taiwan’s market capitalization reached $4.13 trillion on Thursday, ahead of the UK’s $4.09 trillion, according to Bloomberg data. That makes Taiwan the seventh-largest stock market worldwide.

TSMC accounts for 45% of Taiwan’s total market value. The stock has gained almost a third of its value this year, hitting an all-time high. Taiwan’s main Taiex index is up 26.5% for the year, while the UK’s FTSE 100 has risen 6.1%.

William Bratton, who leads cash equity research for Asia-Pacific at BNP Paribas, described it as “the tech and AI supercycle.” He noted that the UK and most of Europe lack major companies exposed to the current technology boom in publicly traded stocks.

The capacity crunch at TSMC has created a bottleneck across the semiconductor industry. The company’s advanced manufacturing slots are booked through 2028. Major customers include Nvidia, Apple, AMD, and Qualcomm.

TSMC’s location in Taiwan has concerned some investors due to tensions between Taiwan and China. In 2022, Warren Buffett’s Berkshire Hathaway bought shares in TSMC but sold them within months over geopolitical worries.

But TSMC produced over 90% of the world’s most advanced semiconductors in 2025. The company generated more than $122 billion in revenue last year, up 32% from 2024. Only 9% came from China, while 74% came from North America.

The prediction market Polymarket currently estimates a 12% chance of a military clash between Taiwan and China this year, a probability that’s remained unchanged despite recent Middle East tensions. The U.S. Navy continues to maintain a presence in the Taiwan Strait.

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