Taiwan Semiconductor Manufacturing (TSM) reported Q4 2025 revenue of $33.73 billion, up 20.4% year-on-year, with 77% of revenue coming from 7nm and below advanced node wafers, while committing $52 billion to $56 billion in capital expenditures in 2026 to serve 534 customers across demand. AI. Broadcom (AVGO) reported Q1 FY2026 AI chip revenue of $8.4 billion, up 106% year-over-year, with Semiconductor Solutions revenue of $12.52 billion (65% of the total) growing 52% year-over-year, and deployed $7.8 billion in stock buybacks in the first quarter, while authorizing a new buyback program of 10 billion dollars.
TSMC’s foundry scale captures simultaneous AI demand from all major chip designers, including Broadcom, while Broadcom’s asset-light custom accelerator approach and cloud provider concentration provide different leverage on the same wave of AI infrastructure.
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chip maker Semiconductor manufacturing in Taiwan (NYSE:TSM) reported its fourth-quarter 2025 results in January, while Broadcom (NASDAQ:AVGO) reported its first-quarter fiscal 2026 results in March. Both are following the same AI wave from structurally different positions: one builds factories, the other designs chips and sells software.
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TSMC’s quarter demonstrated foundry’s leverage at scale. Revenue reached $33.73 billion, up 20.4% year-over-year, with a gross margin of 62.3% exceeding the company’s own guidance range of 59% to 61%.
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Advanced nodes drove the result. Chips built on 7nm processes and below accounted for 77% of wafer revenue, with 3nm alone contributing 28%, the nodes major technology companies rely on for their most demanding silicon.
CEO CC Wei confirmed he personally verified demand with cloud providers before committing to a 2026 capital expenditure budget of between $52 billion and $56 billion, indicating conviction backed by conversations with customers.
Broadcom’s quarter showed a different kind of acceleration. AI chip revenue reached $8.40 billion in the first quarter of fiscal 2026, a 106% year-over-year increase and above the company’s own forecast. First-quarter AI revenue of $8.4 billion grew 106% year-over-year, ahead of expectations, driven by strong demand for custom AI accelerators and AI networks.
The semiconductor solutions segment, which includes custom accelerators and Ethernet AI switches, grew 52% year-over-year to $12.52 billion and now accounts for 65% of total revenue.
Business driver
SST
Broadcom
Revenue (most recent quarter)
$33.73 billion (4th quarter of 2025)
$19.31 billion (Q1 FY2026)
Year-on-year revenue growth
20.4%
29.5%
AI revenue growth
Advanced nodes generate approximately 77% of wafer revenue
$8.4 billion, up 106% year-over-year
Adjusted EBITDA / Gross Margin
62.3% gross margin
Adjusted EBITDA margin of 68%
Investments 2026
$52 billion-$56 billion
~$250 million in Q1 alone (asset light)
TSMC’s capital expenditure budget of between $52 billion and $56 billion is both a pit and a constraint. Additionally, the company serves 534 customers across 305 different process technologies, capturing AI demand from virtually all major chip designers simultaneously, including Broadcom. The main risk is the geopolitical exposure linked to Taiwan’s concentration in the supply chain.
Broadcom’s asset-light structure produces a different financial profile. Free cash flow reached $8.01 billion in the first quarter, representing 41% of revenue. The company deployed $7.8 billion in share buybacks in that single quarter and authorized a new $10 billion buyback program through Dec. 31, 2026. Hock Tan’s stated ambition: to surpass $100 billion in AI sales by 2027. Key risks include customer concentration among hyperscale cloud providers and debt stemming from the acquisition of VMware.
TSMC data from early 2026 already looks strong. Combined revenue for January and February reached $22.57 billion, an increase of 29.9% year-over-year. Guidance for the first quarter of 2026 calls for revenue of between $34.6 billion and $35.8 billion, with gross margin expanding from 63% to 65%. The long-term projection remains ambitious: AI chip revenue is expected to grow at a CAGR of nearly 60% between 2025 and 2029.
Broadcom’s guidance for the second quarter is approximately $22 billion in revenue, implying year-over-year growth of 47%. AI semiconductor revenue, expected at $10.7 billion, is the next figure to watch.
TSM trades at a trailing P/E of approximately 33x with an analyst consensus target of $430.65, while Broadcom has a trailing P/E near 62x and an analyst target of $472.01. In valuation, TSM offers more margin. TSMC’s foundry position is irreplaceable in a way that no chip designer can replicate, giving it broad exposure to AI infrastructure demand.
Broadcom’s custom accelerator approach and generous capital return program represent a different risk-reward profile for those following the AI ​​semiconductor space. Watch to see if Broadcom’s software segment, which grew only about 1% year over year in the first quarter, starts to gain more weight; If you do, the margin story becomes even stronger.
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