TSMC (TSM)

[winston]

not vested

FY26 guidance still looks conservative

1Q26 revenue rose 35.1% y/y (+8.4% q/q), while net income increased 58.3% y/y, beating consensus by 5%, driven by strong leading-edge/HPC demand and better utilisation.

Gross margin was 66.2%, above the 63%–65% guidance range, supported by cost improvements, higher capacity utilisation, and favourable FX.

FY26 revenue growth guidance of “over 30% y/y” remains conservative; we raise FY26F/FY27F earnings by 18%/20% as agentic AI-driven demand extends the robust growth phase of AI chips.

We maintain BUY, as high-end smartphones and AI remain the two key anchors of pricing power, with N2 and advanced packaging still the key medium-term catalysts.

TP: TWD 2400

Source: DBS

https://www.dbs.com/insightsdirect/comp ... ecid=30505