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TSMC's Strong Guidance Supports the Stock's Hot Start to 2026
Written by Leo Miller. Originally Published: 1/15/2026.
Article Highlights
- TSMC shares are already winning in 2026, posting very significant gains just weeks into the year.
- The company received good news from the U.S. government, which will aid its operations in China.
- Its latest earnings also impressed, with the firm providing strong guidance for 2026 and beyond.
After a fantastic 2025, shares of Taiwan Semiconductor Manufacturing (NYSE: TSM) aren't looking back to start the new year. Following a 55% return last year, TSMC shares are already up more than 12% in 2026. Two key developments are helping the stock move higher: export-control news and strong earnings. Together they reinforce the bullish outlook on TSMC and make the stock one of the primary ways to play the artificial intelligence investment theme. All data is as of the Jan. 15 close unless otherwise indicated.
United States Supports TSMC's Mature-Node Operations in China
To start the year, reports emerged that the U.S. government granted a key license to TSMC that lends support to its business in China. The United States will allow the company to import domestically made chip-manufacturing equipment to its plant in Nanjing.
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Watch the video and get the name and ticker for free.That approval enables TSMC to continue operating its Nanjing facility without interruptions or production delays. On Jan. 2, TSMC shares rose by more than 5% after the announcement that was released following the close on Jan. 1.
The Jan. 2 surge was likely not entirely driven by the license news—Nanjing accounts for a relatively small share of TSMC's revenue (about 2.4% of total revenue in 2024), so the direct financial impact is limited. Rather, the move is better viewed in the context of the broader semiconductor sector, which traded higher that day.
For example, the iShares Semiconductor ETF (NASDAQ: SOXX) rose nearly 4.2% on Jan. 2, suggesting the export-license story was a welcome catalyst that helped TSMC outperform its peers.
TSMC Posts Earnings Beats; Guidance Shines
More consequential news arrived on Jan. 15, when markets reacted positively to TSMC's Q4 2025 earnings report. Shares rose roughly 4.4% that day after the company reported revenue of $33.7 billion, a 25.5% year-over-year increase that topped estimates of $31.9 billion (18.7% growth).
TSMC's bottom-line results were even stronger. Diluted earnings per American Depositary Receipt (ADR) were $3.14, up 40% from a year earlier and well above consensus expectations of about $2.82 (26% growth).
But the most notable takeaway wasn't just 2025's results — it was the company's forward guidance. In U.S. dollar terms, TSMC now forecasts full-year revenue growth of "close to 30%" for 2026, implying only a slight deceleration from 2025's 31.6% increase. That outlook was more upbeat than many investors had anticipated.
TSMC also raised its long-term targets. Over the five-year period beginning in 2024, the company expects U.S. dollar revenue to compound at a near-25% CAGR, up from its prior guidance of 20%.
AI-accelerator revenue forecasts were raised as well: TSMC now projects this stream to grow at a "mid-to-high 50% CAGR" from 2024 to 2029, an upgrade from its earlier mid-40% CAGR estimate for the period.
Supporting that bullish outlook, TSMC guided to significant capital expenditure. At the midpoint, the company expects roughly $54 billion in CapEx for 2026 — about a 32% increase versus 2025's $40.9 billion. Companies rarely commit to large CapEx increases unless they see strong, sustained demand, since these investments take years to pay off. The guidance signals TSMC's confidence in long-term opportunities across 5G, AI, and high-performance computing (HPC).
Management did note that depreciation expense should rise meaningfully in 2026 and that expanding overseas operations may compress gross margins by 2% to 4% over time. Those trade-offs are generally acceptable if they support the higher volume and demand TSMC expects ahead.
Updated Price Targets Signal Meaningful Upside
Overall, TSMC continues to demonstrate why it's a cornerstone of the semiconductor and AI investment theme. The company is delivering strong operating performance and upgrading its outlook, making it hard to be anything but constructive on the stock. The consensus price target of $365 implies roughly 7% upside from the Jan. 15 close. After the results, Needham & Company raised its target from $360 to $410, which implies about 20% upside.
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