We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Analysts raise estimates; TSMC-heavy ETFs should gain traction.
Shares of Taiwan Semiconductor Manufacturing Company (TSM - Free Report) jumped on Friday in local trading, hitting a fresh all-time high after Taiwan’s regulator signaled plans to relax limits on fund allocations to individual stocks, as quoted on CNBC. TSM shares have risen about 20% this year and about 11.5% over the past month.
Under the proposed framework, domestic equity funds and actively managed ETFs focused solely on Taiwanese equities will be allowed to allocate up to 25% of their assets to a single company – provided it holds a weighting above 10% on the Taiwan Stock Exchange. Previously, fund managers were restricted to a 10% cap on exposure to any one stock.
Strong Earnings Momentum
The chip giantrecently posted first-quarter 2026 earnings per share of $3.49, which increased 64.6% year over year. The bottom line beat the Zacks Consensus Estimate of $3.31 by 5.44%. The stock has delivered positive earnings surprises in each of the past four quarters, resulting in an average earnings surprise of 8.34%.
TSM posted net revenues of $35.90 billion, which rose 40.6% from the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $35.50 billion by 1.13%, supported by continued strength in leading-edge process demand and a revenue mix increasingly tilted toward high-performance computing.
Profitability expanded meaningfully in the first quarter. TSM’s gross margin was 66.2%, which expanded 740 basis points (bps) from the year-ago quarter and expanded 390 bps sequentially. TSM’s operating margin of 58.1% expanded 960 bps year over year and 410 bps sequentially. TSM’s net profit margin was 50.5%, which expanded 740 bps year over year and 220 bps sequentially.
AI Boom Fuels Growth
As Asia’s most valuable technology company, TSMC plays a critical role in the global semiconductor supply chain, producing chips used in everything from consumer electronics to large-scale data centers (read: Chip Boom in Fine Fettle: ETFs in Focus).
The company continues to benefit from strong demand for advanced chips from major clients such as Apple. It manufactures cutting-edge processors designed by Big Tech firms like NVIDIA, which is its largest customer currently, cementing its position in the AI-driven tech boom, as quoted on CNBC.
TSM Guidance Calls for Another Solid Step Up in Q2 2026
For the second quarter of 2026, TSM guided revenues to be in the range of $39.0 billion to $40.2 billion. The Zacks Consensus Estimate is currently pegged at $39.61 billion.
The company expects gross margin between 65.5% and 67.5% and operating margin between 56.5% and 58.5%, based on an exchange rate assumption of 1 U.S. dollar to 31.7 New Taiwan dollars.
For 2026, management expects 2026 revenues to increase more than 30% in U.S. dollar terms. The Zacks Consensus Estimate is pegged at $160.67 billion.
Upbeat Analyst Views
Over the past seven days, two of six analysts have raised their earnings estimates for the June quarter, increasing the consensus from $3.57 to $3.67. For the full year, five of nine analysts have boosted their forecasts from $14.55 to $15.03.
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, as mentioned in a CNBC article.
TSM-Heavy ETFs in Focus
Investors could tap the robust growth and the latest policy boost 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 - Free Report) , Janus Henderson Global Artificial Intelligence ETF (JHAI - Free Report) , AXS Esoterica NextG Economy ETF (WUGI - Free Report) , National Security Emerging Markets Index ETF (NSI - Free Report) and Gabelli Global Technology Leaders ETF (GGTL - Free Report) . Each of these ETFs has at least a 10% exposure to TSM shares.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
TSMC Stock Surges to Record High on Policy Boost, AI Demand
Key Takeaways
Shares of Taiwan Semiconductor Manufacturing Company (TSM - Free Report) jumped on Friday in local trading, hitting a fresh all-time high after Taiwan’s regulator signaled plans to relax limits on fund allocations to individual stocks, as quoted on CNBC. TSM shares have risen about 20% this year and about 11.5% over the past month.
Under the proposed framework, domestic equity funds and actively managed ETFs focused solely on Taiwanese equities will be allowed to allocate up to 25% of their assets to a single company – provided it holds a weighting above 10% on the Taiwan Stock Exchange. Previously, fund managers were restricted to a 10% cap on exposure to any one stock.
Strong Earnings Momentum
The chip giantrecently posted first-quarter 2026 earnings per share of $3.49, which increased 64.6% year over year. The bottom line beat the Zacks Consensus Estimate of $3.31 by 5.44%. The stock has delivered positive earnings surprises in each of the past four quarters, resulting in an average earnings surprise of 8.34%.
TSM posted net revenues of $35.90 billion, which rose 40.6% from the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $35.50 billion by 1.13%, supported by continued strength in leading-edge process demand and a revenue mix increasingly tilted toward high-performance computing.
Profitability expanded meaningfully in the first quarter. TSM’s gross margin was 66.2%, which expanded 740 basis points (bps) from the year-ago quarter and expanded 390 bps sequentially. TSM’s operating margin of 58.1% expanded 960 bps year over year and 410 bps sequentially. TSM’s net profit margin was 50.5%, which expanded 740 bps year over year and 220 bps sequentially.
AI Boom Fuels Growth
As Asia’s most valuable technology company, TSMC plays a critical role in the global semiconductor supply chain, producing chips used in everything from consumer electronics to large-scale data centers (read: Chip Boom in Fine Fettle: ETFs in Focus).
The company continues to benefit from strong demand for advanced chips from major clients such as Apple. It manufactures cutting-edge processors designed by Big Tech firms like NVIDIA, which is its largest customer currently, cementing its position in the AI-driven tech boom, as quoted on CNBC.
TSM Guidance Calls for Another Solid Step Up in Q2 2026
For the second quarter of 2026, TSM guided revenues to be in the range of $39.0 billion to $40.2 billion. The Zacks Consensus Estimate is currently pegged at $39.61 billion.
The company expects gross margin between 65.5% and 67.5% and operating margin between 56.5% and 58.5%, based on an exchange rate assumption of 1 U.S. dollar to 31.7 New Taiwan dollars.
For 2026, management expects 2026 revenues to increase more than 30% in U.S. dollar terms. The Zacks Consensus Estimate is pegged at $160.67 billion.
Upbeat Analyst Views
Over the past seven days, two of six analysts have raised their earnings estimates for the June quarter, increasing the consensus from $3.57 to $3.67. For the full year, five of nine analysts have boosted their forecasts from $14.55 to $15.03.
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, as mentioned in a CNBC article.
TSM-Heavy ETFs in Focus
Investors could tap the robust growth and the latest policy boost 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 - Free Report) , Janus Henderson Global Artificial Intelligence ETF (JHAI - Free Report) , AXS Esoterica NextG Economy ETF (WUGI - Free Report) , National Security Emerging Markets Index ETF (NSI - Free Report) and Gabelli Global Technology Leaders ETF (GGTL - Free Report) . Each of these ETFs has at least a 10% exposure to TSM shares.