TSMC Valuation Debate

Taiwan Semiconductor Manufacturing Co. is posting record AI-fueled growth, and investors are now arguing over whether the stock has run ahead of that demand. (investor.tsmc.com) TSMC said on April 16 that first-quarter 2026 revenue rose 35.1% from a year earlier to NT$1.134 trillion, while net income climbed 58.3% to NT$572.48 billion. Gross margin reached 66.2%, above the company’s earlier guidance range. (pr.tsmc.com) Management also raised its 2026 outlook, guiding second-quarter revenue to $39.0 billion to $40.2 billion and saying full-year sales should grow by “close to mid-30s percent” in U.S. dollar terms. TSMC said capital spending would stay between $38 billion and $42 billion this year. (investor.tsmc.com) TSMC is the factory behind many of the chips designed by Nvidia, Apple and other customers, and the current argument is simple: if artificial-intelligence servers keep absorbing the most advanced chips, TSMC’s pricing can stay high. If that spending cools, a richer valuation gets harder to defend. (pr.tsmc.com) The company’s latest numbers show where that strength is concentrated. In the first quarter, 3-nanometer chips made up 25% of wafer revenue, while 5-nanometer chips made up 36% and 7-nanometer chips 13%, tying growth to TSMC’s most advanced production lines. (investor.tsmc.com) The valuation debate has intensified because the stock has climbed fast. Reuters, cited in April 2026 market coverage, said TSMC shares were up about 35% this year and valued the company at roughly $1.7 trillion, while CompaniesMarketCap recently showed TSMC near $1.9 trillion. (qz.com) (companiesmarketcap.com) TSMC is also spending heavily to keep that lead. The company said its Arizona project has expanded to $165 billion and now includes plans for six wafer fabs, two advanced-packaging facilities and an research-and-development center, while its Dresden joint venture broke ground in August 2024. (tsmc.com) (pr.tsmc.com) That build-out cuts against one bearish argument that customers and governments will quickly diversify away from Taiwan. TSMC’s own filings show it is adding manufacturing in the United States, Japan and Germany, but the company still says new fabs take years to build and ramp. (pr.tsmc.com) (tsmc.com) TSMC’s 2025 annual-report filing said it served 534 customers and manufactured 12,682 products using 305 process technologies, a scale that helps explain why investors keep paying a premium for the company. The question in April 2026 is not whether AI demand is real, but how much of that demand is already reflected in the share price. (pr.tsmc.com)