TSMC 4Q25: AI Demand Confirmed; Future Three-Year CapEx to Significantly Exceed Sum of Past Three Years

TSMC delivered strong signals during this earnings call. Management’s view on AI demand has shifted from previous optimism to conviction, responding to the market with significantly raised CapEx and revenue CAGR guidance. C.C. Wei explicitly stated that AI demand is not only real but “Endless.” To alleviate capacity bottlenecks, the 2026 CapEx budget has jumped to the $52-56 billion range, with total CapEx over the next three years set to significantly exceed the sum of the past three years.

4Q25 Results & 1Q26/2026 Outlook

4Q25 Results: 4Q25 USD revenue reached $33.73B (+1.9% QoQ / +25.5% YoY), slightly beating the upper end of prior guidance ($32.2B-$33.4B), primarily driven by robust demand for advanced nodes. Gross margin arrived at 62.3% (+2.8 ppts QoQ), significantly beating the guidance range (59.0%-61.0%). The better-than-expected performance was mainly attributed to cost improvements, favorable FX, and high UTR.