TSMC’s revenue growth in the fourth quarter of 2025 exceeded market expectations.
The foundry giant looks poised for faster growth in 2026.
TSMC’s ability to deliver a better-than-expected outlook when it releases its results on January 15 could be a tailwind for the company’s share price.
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The semiconductor industry is set for another year of fantastic growth in 2026, and one of the best ways to capitalize on this market’s sunny outlook is by investing in Semiconductor manufacturing in Taiwan(NYSE: TSM)the largest semiconductor foundry in the world.
Popularly known as TSMC, the foundry giant’s stock has recorded impressive gains of 59% in the market over the past year. It won’t be surprising to see TSMC stock rise in 2026, as semiconductor sales are expected to accelerate in the new year. World Semiconductor Trade Statistics (WSTS) estimates a 26.3% increase in semiconductor industry revenue this year, an increase of almost 4 points over 2025 growth.
This could translate into further growth for TSMC in the new year as it makes chips designed by the world’s leading chip designers and deployed in a wide variety of applications. TSMC stock should get a nice boost when it releases its fourth-quarter 2025 results on January 15. Let’s look at why that may be the case.
Image source: TSMC.
TSMC recently released its December earnings report, recording a 20.4% year-over-year increase in its revenue for the month. The chip giant’s revenue slightly exceeded analysts’ expectations.
TSMC’s December revenue means its revenue rose 31.6% in 2025 in new Taiwan dollars. The company grew at a faster pace than the semiconductor market last year. This is not surprising, as TSMC has been capturing a larger share of the Foundry 2.0 market, which encompasses chip manufacturing, assembly and testing.
Counterpoint Research estimates that TSMC’s Foundry 2.0 market share increased 6 percentage points year-over-year in the third quarter of 2025 to 39%. It was the fastest-growing player in this space during the quarter, and by a wide margin. The next fastest growing Foundry 2.0 player was Texas Instrumentswhich saw a 14% year-over-year increase in revenue, compared to the 41% jump recorded by TSMC in Q3 revenue.
The dominant position that TSMC enjoys in the Foundry 2.0 market can be attributed to its cutting-edge semiconductor manufacturing nodes, as well as the company’s focus on aggressive capacity expansion to support healthy demand for artificial intelligence (AI) chips. For example, the company reportedly aims to increase its monthly advanced packaging capacity, which is crucial for manufacturing AI chip systems, to 120,000-130,000 wafers by the end of the year, up from 75,000-80,000 wafers monthly by the end of 2025.
Additionally, third-party reports expect TSMC’s 2 nanometer (nm) production capacity to double by the end of 2026 compared to last month. The company is building new capacity at a more aggressive pace right now, which is not surprising considering it is overwhelmed by demand. TSMC’s 2nm production capacity is reportedly exhausted for this year, and any new capacity it brings online should ideally help it fill more orders.
Additionally, TSMC has reportedly been asked NVIDIA(NASDAQ: NVDA) to increase production of the latter’s H200 data center chips to support orders from China. According to an exclusive report from Reuters, Chinese technology companies have placed orders for 2 million of Nvidia’s H200 advanced processors, which are 6 times more powerful than the H20 chip it previously sold in that market.
The report notes that Nvidia currently has 700,000 H200 chips in stock, indicating that TSMC will need to expand production to meet demand. TSMC is expected to increase production of Nvidia’s H200 chips starting in the second quarter.
The points discussed above suggest that TSMC’s revenue growth in 2026 could accelerate, and that’s precisely why its stock is likely to jump after its January 15 quarterly report.
Analysts expected an 18% increase in TSMC’s revenue in the fourth quarter of 2025 to 1.02 trillion New Taiwan dollars. We have already seen that the company has done better than that. Consensus estimates project TSMC’s growth rate in the first quarter of 2026 to accelerate to 22%.
However, its aggressive capacity expansion, improving market share, reopening another revenue stream in the form of Nvidia’s Chinese business, and stronger growth in the semiconductor industry this year should allow it to easily beat analyst estimates. Additionally, TSMC’s full-year revenue growth estimate is 23.3%, pointing to a slowdown from the 31.6% revenue growth it achieved in 2025.
But there is ample evidence to suggest that TSMC’s growth could be much greater than that. So, don’t be surprised to see management calling for a much bigger increase in TSMC’s revenue this year when it releases its earnings next week. That’s why investors may consider buying this semiconductor stock before January 15, especially considering it has the potential to offer impressive upside to investors in 2026.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Nvidia, Taiwan Semiconductor Manufacturing, and Texas Instruments. The Motley Fool has a disclosure policy.
Prediction: TSMC Stock Will Skyrocket After January 15 was originally published by The Motley Fool
