Taiwan Semiconductor (TSM) Stock Set for Record Fourth Straight Quarter on AI Demand

TLDR

• TSMC is expected to report a fourth consecutive quarter of record profit on Thursday, with net profit forecast at T$542.6 billion (~$17.1 billion).
• That would represent a ~50% surge in net profit year-on-year for Q1 2026.
• Bank of America raised its price target from $470 to $500, maintaining a Buy rating.
• Q1 revenue already came in ahead of forecasts, up 35% year-on-year.
• TSMC’s Taipei-listed stock is up 28% year-to-date, outpacing the broader market’s 22% gain.

TSMC is heading into Thursday’s earnings report with momentum. Analysts expect the chipmaker to post net profit of T$542.6 billion ($17.1 billion) for Q1 2026 — a roughly 50% jump from the same period last year.

Taiwan Semiconductor Manufacturing Company Limited, TSM

That figure comes from an LSEG SmartEstimate, which weights forecasts from analysts with stronger track records. Any result above T$505.7 billion would be TSMC’s highest-ever quarterly net income.

It would also mark the ninth straight quarter of profit growth.

TSMC already gave investors a preview last week. The company reported Q1 revenue up 35% year-on-year — ahead of what analysts had expected.

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

TSMC’s market cap now sits at around $1.6 trillion — nearly double that of Samsung Electronics. Its Taipei-listed stock is up 28% so far this year, beating the broader market’s 22% gain.

Bank of America Raises Price Target to $500

On April 12, Bank of America Securities lifted its price target on TSM from $470 to $500, keeping a Buy rating in place. The firm is forecasting 7%–9% quarter-on-quarter sales growth in Q2, driven by high-performance computing orders.

BofA also expects gross margins to expand from the 63%–65% range in Q1 to around 66% in Q2.

Macquarie Capital’s head of Asia tech research, Arthur Lai, said he expects TSMC to guide for higher quarter-on-quarter revenue growth in Q2 — pointing to sustained AI demand and the company’s lead in advanced-node manufacturing.

One thing investors will watch closely on Thursday: whether TSMC holds or raises its 2026 capital spending plans. That number is seen as a signal of how confident management is in long-term AI demand.

TSMC is currently investing $165 billion to build chip factories in Arizona. It has also upgraded its Japan plans — shifting from mature nodes to full 3-nanometre production there.

Valuation Flags Worth Watching

Not everything is a clean green light. GuruFocus puts TSMC’s intrinsic value at $280.17, making the current price of $370.60 look roughly 32% overvalued on that measure.

The stock’s P/E ratio stands at 30.19x — well above its five-year median of 22.55x.

That said, 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 buys and zero recorded sales.

On the supply side, the war in the Middle East has raised some concern about disruption to semiconductor materials like helium and neon. IDC’s Galen Zeng said TSMC’s diversified sourcing and safety stock should be enough to handle short-term disruptions.

TSMC’s earnings call is scheduled for 0600 GMT on Thursday, where the company will also issue Q2 guidance and an updated full-year outlook.

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