TSMC $TSM ( ▲ 4.44% ) just reminded the market who actually runs the AI supply chain.
The world’s largest chipmaker is surging in premarket trading after posting stellar Q4 results and delivering a Q1 outlook that came in well above expectations, both on revenue and margins.
If Nvidia is the face of the AI boom, TSMC is the factory behind it.
Q4 Numbers Were a Flex
TSMC reported Q4 EPS of NT$19.50, well above estimates of NT$18.12.
But the bigger surprise was profitability. The company’s margins came in stronger than analysts expected and even beat the high end of management’s own guidance:
Gross margin: 62.3% vs 60.6% expected
Operating margin: 54% vs 50.9% expected
That is not just demand strength. That is elite execution.
TSMC also confirmed quarterly sales of NT$1.046 trillion, beating Wall Street’s projection of NT$1.02 trillion.
Q1 Outlook Crushed Expectations
Management’s Q1 revenue guidance was the real headline.
TSMC expects revenue between $34.6B and $35.8B, far above the Street’s $33.2B estimate.
And it did not just guide revenue higher. It guided margins higher too:
Gross margin expected 63% to 65% vs 59.6% expected
Operating margin expected 54% to 56% (even the low end beat the highest analyst estimate)
In other words: the AI demand wave is not slowing, and TSMC is pricing it like it knows it has no real competition.
Capex Is Going Vertical
TSMC also made it clear it is spending aggressively to meet demand.
The company expects capex between $52B and $56B this year, with 70% to 80% of that aimed at advanced process technologies.
That is basically TSMC saying: AI is not a cycle, it is a new base layer.
The Whole AI Factory Complex Rallied
TSMC’s strength spilled into the broader semiconductor supply chain.
ASML $ASML ( ▲ 5.37% ) rose as well, since its lithography machines are essential for producing the most advanced chips.
When TSMC ramps, the ecosystem prints.
Trade Deal Rumors Add a Tailwind
This all comes after reports that Taiwan may sign a trade deal with the US soon, with TSMC likely playing a central role.
Taiwan is reportedly aiming for:
lower tariffs
favorable treatment for semiconductor exports
support as TSMC expands manufacturing in the US
So the political backdrop may be turning into another tailwind.
Bottom line: TSMC $TSM did not just beat earnings. It beat on revenue, crushed on margins, guided higher across the board, and committed to spending even more to feed the AI boom. This is what the market looks like when the most important factory on earth posts receipts.