TSMC CapEx a gold mine...for ASML.
2025 sales for the full year increased 36%, and management is guiding for sales to rise another 30% in 2026. It's aiming for a compound annual growth rate of 25% through 2029, which is serious growth, especially for a company that's already as large as TSMC. It had $122 billion in 2025 revenue.
2. TSMC is highly profitable
TSMC is a capital-intensive business, since it plows money into its foundry plants that manufacture physical semiconductors. Despite that, it's incredibly profitable, with high sales volume and a disciplined cost structure.
In the fourth quarter, gross margin expanded from 59% in 2024 to 62.3% in 2025, and operating margin expanded from 49% to 54%. Management is guiding for gross margin to reach 63% to 64% in the 2026 first quarter and to stay above 56% long term, and for operating margin to be between 54% and 56% in the first quarter.
3. TSMC benefits from some strong AI tailwinds
The company is a lot more than AI, although that's an integral component of its model these days. High-performance computing (HPC), the segment that includes the AI business, accounted for 58% of revenue in 2025; its growth rate increased 48% year over year.
Capital expenditures (capex) were $41 billion in 2025, up from $30 billion in 2024, and management updated investors that increasing capex has always been correlated with high opportunities; it's investing in potential and the ability to meet high demand. To that end, it's raising capex spend to about $54 billion in 2026, with about 70% to 80% going to what it calls "advanced process technologies." In this case, the market is excited about higher capex spend, because it implies higher growth on the way.
3 reasons to buy TSMC stock like there's no tomorrow
PS
Samsung, TSMC, Intel big EXE, NXE, NXTi spend '26 on!
RAM & NAND fabs scramble to keep up!
ASML
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