A blowout earnings report from the world's most critical chip supplier reignited the semiconductor rally Thursday, underscoring just how tightly the sector is now tethered to the AI spending supercycle.

Taiwan Semiconductor Earnings Fuel Chip Stock Rally

Taiwan Semiconductor beat fourth-quarter expectations, reinforcing its role as a key supplier to customers like Nvidia.

The company posted net sales of $33.73 billion, up 20.5% year-over-year, topping the $33.27 billion analyst consensus.

Net income rose 35% to $16.31 billion, and EPS came in at $3.14, above the $2.79 consensus estimate.

Margins expanded as utilization improved and costs came down, with gross margin reaching 62.3%.

Optimistic Outlook Highlights AI Demand

It projected first-quarter 2026 revenue of $34.60 billion to $35.80 billion, with a gross margin of 63% to 65%.

The company also forecast about 30% full-year 2026 revenue growth in U.S. dollar terms and outlined 2026 capex of $52 billion to $56 billion, with 70% to 80% aimed at advanced technologies.

Broader Semiconductor Ecosystem Rides Momentum

Semiconductor stocks continue to bask in the glory of surging investor interest as Big Tech giants remain aggressive in their AI ambitions.

TSM Price Action: Taiwan Semiconductor shares were up 6.62% at $348.77 during premarket trading on Thursday. The stock is trading at a new 52-week high, according to Benzinga Pro data.

Photo by Jack Hong via Shutterstock