Taiwan Semiconductor Manufacturing Co. NYSE:TSM, the Taiwanese chipmaker that produces most of the world's advanced semiconductors, has raised its 2026 spending and revenue forecasts as demand for artificial intelligence chips and data-center infrastructure continues to rise. The company now expects capital expenditure of between $60 billion and $64 billion, at least $4 billion above its previous projection. TSMC also expects U.S.-dollar revenue to grow slightly more than 40% in 2026, substantially higher than its earlier forecast of more than 30% and above the 35% consensus estimate. The stronger outlook follows a faster-than-expected 77.4% increase in quarterly net income. Despite these results, TSMC's U.S.-listed shares declined about 3% in premarket trading after rising nearly 40% this year, as investors appeared to take profits following the announcement.
Management's updated guidance suggests the AI investment cycle could continue supporting chip demand through 2027 and beyond. NVIDIA NASDAQ:NVDA, a designer of chips used in artificial intelligence computing, relies on TSMC as its main chip manufacturer, while Apple NASDAQ:AAPL, the consumer-technology company behind the iPhone, also uses TSMC to produce its chips. Meta Platforms NASDAQ:META, a technology company investing in AI infrastructure, and Alphabet NASDAQ:GOOGL, Google's parent company, are among the four largest U.S. AI operators expected to spend more than $725 billion this year. Chief Financial Officer Wendell Huang said TSMC remains highly confident in the AI megatrend and expects capital expenditure during the next three years to be significantly higher than in the previous three years. The increased spending is expected to raise capital intensity to approximately 36% of sales in 2026 from 33.5% in 2025, although higher depreciation and overseas manufacturing costs could place pressure on margins during 2027 and 2028.
TSMC has now allocated $265 billion toward expanding its manufacturing capacity in Arizona as part of a broader agreement between Washington and Taipei to bring more advanced semiconductor production to the United States. Chief Executive Officer C.C. Wei warned in June that the company may remain unable to meet demand from U.S. customers for several years, even as additional American capacity begins operating. ASML Holding NASDAQ:ASML, a European supplier of semiconductor manufacturing equipment, rose as much as 3.4% before reducing its gains, while Tokyo Electron, another major TSMC supplier, recovered some losses but ended the session more than 4% lower. SK Hynix, a memory-chip producer supplying conventional and high-bandwidth memory used in AI systems, expects memory shortages to continue beyond 2030 as data-center investment increases demand. TSMC's higher forecasts may support stronger semiconductor sales expectations, but investor concerns over elevated valuations, growing borrowing by data-center operators and uncertainty surrounding returns on AI spending could continue to drive volatility across the sector.