Taiwan Semiconductor Manufacturing (NYSE:TSM) Releases Quarterly Earnings Results, Beats Estimates By $0.18 EPS

Key Points

• TSMC topped Q1 estimates with EPS $3.49 and revenue of $35.98 billion (up 40.6% YoY), reported a 66.2% gross margin, and issued upbeat guidance of $39.0–$40.2 billion for Q2 while raising 2026 revenue growth expectations to above 30% in USD.
• The company is accelerating investment to meet AI/HPC demand—guiding 2026 CapEx toward the high end of $52–$56 billion and expanding N3 fabs globally while ramping N2/A14—but warned those ramps and overseas fabs may dilute gross margins by roughly 2–4% and geopolitical/material costs could further pressure profitability.

Taiwan Semiconductor Manufacturing (NYSE:TSM - Get Free Report) released its earnings results on Thursday. The semiconductor company reported $3.49 EPS for the quarter, topping the consensus estimate of $3.31 by $0.18, Zacks reports. Taiwan Semiconductor Manufacturing had a net margin of 45.13% and a return on equity of 34.89%. The firm had revenue of $35.98 billion for the quarter, compared to the consensus estimate of $35.47 billion. During the same quarter in the previous year, the firm earned $2.12 earnings per share. The company's quarterly revenue was up 40.6% compared to the same quarter last year.

Here are the key takeaways from Taiwan Semiconductor Manufacturing's conference call:

• TSMC reported a strong Q1 with revenue of $35.9 billion (up 6.4% sequential in USD), gross margin 66.2% (+390 bps QoQ), operating margin 58.1%, EPS TWD 22.08 and ROE 40.5%.
• Q2 guidance is upbeat — revenue guidance of $39.0–$40.2 billion (≈10% sequential) and management now expects full‑year 2026 revenue growth of above 30% in USD, with gross margin guided to 65.5%–67.5%.
• TSMC is accelerating investment to meet AI/HPC demand, guiding 2026 CapEx toward the high end of $52–$56 billion and executing global N3 expansions (new fabs in Tainan, Arizona, Japan) while ramping N2 and A14 technologies.
• Management flagged margin headwinds — initial N2 ramp expected to dilute 2026 gross margin by ~2–3%, overseas fab ramps may dilute margins (2–3% early, widening to 3–4% later), and possible material/gas price increases from Middle East tensions could further pressure profitability.
• Demand/supply outlook — AI/HPC demand remains “extremely robust” and capacity is expected to stay tight into 2027; TSMC emphasizes supply‑chain resiliency (multi‑sourcing, safety stock) and government coordination on energy to avoid near‑term disruptions.

Taiwan Semiconductor Manufacturing Price Performance

Shares of TSM stock opened at $363.25 on Friday. The stock has a 50 day moving average price of $354.34 and a 200 day moving average price of $320.99. Taiwan Semiconductor Manufacturing has a 52-week low of $145.84 and a 52-week high of $390.20. The company has a debt-to-equity ratio of 0.17, a quick ratio of 2.42 and a current ratio of 2.62. The firm has a market capitalization of $1.88 trillion, a P/E ratio of 34.11, a P/E/G ratio of 1.15 and a beta of 1.35.

Taiwan Semiconductor Manufacturing Cuts Dividend

The firm also recently declared a quarterly dividend, which will be paid on Thursday, July 9th. Stockholders of record on Thursday, June 11th will be issued a $0.9503 dividend. This represents a $3.80 annualized dividend and a dividend yield of 1.0%. The ex-dividend date is Thursday, June 11th. Taiwan Semiconductor Manufacturing's dividend payout ratio is presently 27.89%.

Key Headlines Impacting Taiwan Semiconductor Manufacturing

Here are the key news stories impacting Taiwan Semiconductor Manufacturing this week:

• Positive Sentiment: Blockbuster Q1 results — TSMC posted a record quarterly profit that beat estimates and its revenue surged year-over-year, validating strong demand for AI chips. Article Title
• Positive Sentiment: Raised guidance and AI-led demand — Management lifted 2026 growth guidance (above 30% in some reports) and described AI infrastructure demand as “insatiable,” supporting medium-term revenue visibility. Article Title
• Positive Sentiment: Analyst optimism / higher price targets — Some brokers raised targets and kept buy ratings after the beat-and-raise, which supports upside for multi-quarter holders. Article Title
• Neutral Sentiment: Regulatory & reporting updates — TSMC filed its Form 20‑F and noted minor IFRS reporting differences; useful for accounting/forecast models but not market-moving on its own. Article Title
• Neutral Sentiment: Full earnings materials available — Call transcript, slide deck and disclosures were posted (helpful for earnings-model checks). Article Title
• Negative Sentiment: Stock weakness despite the beat — Several outlets note the shares fell after earnings as investors rotated, took profits and digested the stock’s rich multiple. That intraday selling pressure is a key reason for today’s decline. Article Title
• Negative Sentiment: Valuation & geopolitical risk — Commentators warn TSMC’s multiples look stretched and cite Middle East tensions (higher costs/energy risk) as a potential margin/headline risk investors must price in. Article Title
• Negative Sentiment: Rising capex & supply bottlenecks — Aggressive spending to expand 3nm and advanced packaging capacity supports long‑term growth but raises near-term cash needs and execution risk; equipment/supplier headlines (e.g., ASML moves) have pressured sector sentiment. Article Title

Analyst Upgrades and Downgrades

TSM has been the topic of a number of research reports. Sanford C. Bernstein restated an "outperform" rating on shares of Taiwan Semiconductor Manufacturing in a report on Friday, January 2nd. Freedom Capital upgraded Taiwan Semiconductor Manufacturing to a "strong-buy" rating in a research report on Thursday, January 15th. Wedbush reiterated an "outperform" rating on shares of Taiwan Semiconductor Manufacturing in a research report on Wednesday, February 11th. Dbs Bank raised Taiwan Semiconductor Manufacturing to a "moderate buy" rating in a research note on Friday, January 23rd. Finally, Argus upgraded Taiwan Semiconductor Manufacturing to a "strong-buy" rating in a research report on Thursday, January 15th. Three research analysts have rated the stock with a Strong Buy rating, ten have issued a Buy rating and two have issued a Hold rating to the stock. Based on data from MarketBeat, Taiwan Semiconductor Manufacturing presently has an average rating of "Buy" and an average target price of $401.43.

Insider Buying and Selling

In other Taiwan Semiconductor Manufacturing news, VP Bor-Zen Tien bought 1,000 shares of Taiwan Semiconductor Manufacturing stock in a transaction on Sunday, March 22nd. The shares were acquired at an average price of $55.93 per share, for a total transaction of $55,930.00. Following the completion of the purchase, the vice president directly owned 9,051 shares in the company, valued at approximately $506,222.43. This trade represents a 12.42% increase in their position. The acquisition was disclosed in a filing with the Securities & Exchange Commission, which is available at this link. 1.11% of the stock is owned by company insiders.

Institutional Trading of Taiwan Semiconductor Manufacturing

A number of large investors have recently made changes to their positions in the stock. Quattro Advisors LLC purchased a new stake in Taiwan Semiconductor Manufacturing during the fourth quarter worth $25,000. Resources Management Corp CT ADV bought a new stake in Taiwan Semiconductor Manufacturing during the second quarter valued at about $32,000. Riggs Asset Managment Co. Inc. purchased a new position in Taiwan Semiconductor Manufacturing in the second quarter valued at about $41,000. FWL Investment Management LLC grew its stake in Taiwan Semiconductor Manufacturing by 26.5% in the second quarter. FWL Investment Management LLC now owns 253 shares of the semiconductor company's stock valued at $57,000 after purchasing an additional 53 shares during the last quarter. Finally, SWAN Capital LLC raised its holdings in Taiwan Semiconductor Manufacturing by 65.7% in the fourth quarter. SWAN Capital LLC now owns 227 shares of the semiconductor company's stock worth $69,000 after purchasing an additional 90 shares in the last quarter. 16.51% of the stock is owned by hedge funds and other institutional investors.

About Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing Company (TSMC) is a leading pure-play semiconductor foundry that provides wafer fabrication and related services to the global semiconductor industry. Founded in 1987 by Morris Chang and headquartered in Hsinchu, Taiwan, TSMC manufactures integrated circuits on behalf of fabless and integrated device manufacturers, offering contract chip production across a broad set of technologies and products.

TSMC's service offering covers logic and mixed-signal process technologies, specialty processes for radio-frequency, power management and embedded memory, and advanced nodes used in mobile, high-performance computing and AI applications.