TSMC Posts Record Q1 Profits, Signaling Strong Growth for AI and Semiconductor Sector

TSMC delivered a stellar 58% net profit growth for Q1, driven by relentless demand for advanced 2nm and 3nm nodes. While the company raised its forward guidance to reinforce the AI growth narrative, market attention is shifting toward its key partner, NVIDIA. Analysts note that NVIDIA's shares are currently considered undervalued compared to their three-year mean price, despite the company's rapid revenue expansion. This rapid growth is not yet fully reflected in NVIDIA's recent stock price performance, suggesting potential upside as TSMC narrows its CapEx guidance to the $52–$56 billion range. Projections indicate fierce competition for production capacity through 2028, with major customers securing supply via prepayments. Investors are now balancing TSMC's 66.2% gross margins against the attractive valuation metrics emerging for the broader AI ecosystem.