Plenty of companies report sales over the years. But few numbers move the global semiconductor sector as much as the monthly update from Taiwan.
Every month, Taiwan Semiconductor Manufacturing Company (TSM) posts one line of revenue. TSM is the company that builds the chips inside Nvidia’s (NVDA) AI accelerators, Apple’s (AAPL) iPhones, and much of the modern internet.
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That one line has become a real-time gauge for the health of the artificial intelligence (AI) trade. And the May revenue report did not disappoint.
Why TSMC Sales are the Clearest Read on AI Chip Demand
TSMC invented the foundry business model back in 1987. Instead of designing its own chips, it manufactures them for others. Today, it produces silicon for hundreds of customers, including Nvidia, Advanced Micro Devices (AMD), Apple, and Broadcom (AVGO).
In 2025, the company built 12,682 different products for 534 customers, according to a company statement. That scale makes TSMC a kind of toll booth for the AI economy. Almost every cutting-edge AI chip in the world passes through its factories. So, when AI spending rises, TSMC is one of the first companies to benefit from the underlying demand.
And right now, that spending is enormous. Cloud giants like Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOG) (GOOGL), and Meta (META) are pouring tens of billions of dollars into AI data centers each quarter.
TSMC Revenue Jumps 30% as AI Orders Stay Red Hot
TSMC reported May 2026 revenue of about NT$416.98 billion, according to a company statement. At an exchange rate of 0.031, that works out to roughly $12.93 billion.
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Sales rose 1.5% from April. More importantly, it jumped 30.1% year-over-year (YOY).
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The growth looks just as strong over a longer stretch. From January through May 2026, revenue totaled about NT$1,961.80 billion, or close to $60.82 billion. That is up 30.0% from the year-ago period.
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In plain terms, TSMC is selling about a third more product than it was a year ago. And it is doing that while raising prices and running its factories near full capacity.
The May figure backs up what management told investors on the company’s first-quarter earnings call in April. TSMC said it now expects full-year 2026 revenue to grow by more than 30% in U.S. dollar terms.
First quarter revenue came in at $35.9 billion, and gross margin reached 66.2%. The company guided second-quarter revenue to a range of $39.0 billion to $40.2 billion.
C.C. Wei Sees AI Demand Staying ‘Extremely Robust’
On the earnings call, CEO C.C. Wei said AI demand “continues to be extremely robust.” He pointed to a shift from chatbots that answer questions toward agentic AI that takes actions on its own. That shift burns through far more computing power, which means more chips are needed.
Demand is so strong that supply still cannot keep up. Wei reminded analysts that it takes 2-3 years to build a new factory, and another year or two to get it running at full capacity. There are, in his words, no shortcuts.
To meet that demand, TSMC is spending heavily. The company now expects 2026 capital spending to land near the high end of its $52 billion to $56 billion range. CFO Wendell Huang said spending over the next three years should run significantly higher than the past three years.
TSMC is adding 3-nanometer capacity in Taiwan, Arizona, and Japan to feed the AI pipeline, which should drive future growth.
Is TSM Stock Still Undervalued?
Analysts tracking TSM stock forecast revenue to increase from $120.64 billion in 2025 to $255 billion in 2028. In this period, adjusted earnings per share are projected to expand from $2.10 to $4.93.
If TSM stock is priced at 18.5x forward earnings, which is similar to its 10-year average, it could gain roughly 30% within the next 18 months. If the earnings multiple expands to 25x, it could surge over 70%.
Out of the 17 analysts covering TSM stock, 13 recommend “Strong Buy”, two recommend “Moderate Buy,” and two recommend “Hold”. The average TSM stock price target is $450.46, indicating the stock could have an 8% upside from here.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com