Taiwan Semiconductor Manufacturing Co. TSM, the world's largest contract chipmaker, just finished another record-breaking quarter, thanks to strong demand for artificial intelligence (AI) chips.On April 10, 2026, the company reported a 35% surge in first-quarter revenues, as quoted on Reuters. The TSM stock rose 1.4% on April 10 and added 0.1% gains after hours.
For the January-March period, the company posted revenues of 1.13 trillion New Taiwan dollars ($35.6 billion), surpassing analyst estimates of 1.12 trillion New Taiwan dollars, as quoted on CNBC. The Zacks Consensus Estimate for Q1 revenues stands at $35.50 billion.
TSMC has reportedly increased prices for its most advanced chips, which led to the revenue beat. Gross margins for the first quarter are expected to reach around 64%, reflecting strong pricing power.
AI Demand Drives Growth
TSMC continues to benefit from robust demand for advanced semiconductors from key clients such as Apple and NVIDIA. Despite concerns over potential supply chain issues due to the Iran war, AI-related demand remains strong and is driving overall performance. In war-laden March itself, revenues jumped 45.2% year over year to 415.2 billion New Taiwan dollars, as quoted on CNBC.
AI Segment Offsets Weakness in Other Markets
According to SemiAnalysis analyst Sravan Kundojjala, TSMC is likely to exceed its 30% annual growth target, as mentioned in the same CNBC article.
While smartphone and PC markets faced pressure due to memory shortages, the company’s AI segment more than made up for the weakness.
What Lies Ahead?
Analysts have boosted their forecast for TSMC's April-June ???revenues by 2.3% over the last 30 days to a record T$1.2 trillion, LSEG data showed, as quoted on Reuters, on expectations of subdued capacity for advanced AI chip production.
Note that the Zacks Consensus Estimate for earnings for both the March and June quarters has also been raised by analysts over the past month. The earnings estimate for each of the March and June quarters has been upped by 2 cents to $3.29 and $3.57, respectively.
Any Caveat?
An increasing number of companies are developing their own chips, including hyper-scalers like Google LLC and firms like Arm Holdings plc, which has expanded into producing its own CPUs.
However, despite growing competition in chip design, most advanced semiconductor production continues to rely on TSMC and key rivals such as Samsung Electronics and Intel Corporation.
TSM-Heavy ETFs in Focus
Investors could tap the robust growth with the help of ETFs having the largest allocation to the world’s largest contract semiconductor manufacturer. These include SP Funds S&P World ex-US ETF SPWO, Janus Henderson Global Artificial Intelligence ETF JHAI, AXS Esoterica NextG Economy ETF WUGI, National Security Emerging Markets Index ETF NSI and Gabelli Global Technology Leaders ETF GGTL. Each of these ETFs has at least a 10% exposure to TSM shares.
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This article originally published on Zacks Investment Research (zacks.com).