Taiwan Semiconductor Manufacturing (TSM) stock has hit a new all-time high of 348.42, rallying nearly 7% on Thursday. The world’s largest contract chipmaker posted stronger-than-expected fourth-quarter earnings and revenue, which fueled not just TSMC but other chip stocks too. The company reported non-GAAP earnings of $3.14 per share for the quarter, topping market expectations. Revenue rose to $33.73 billion, up about 26% from a year earlier and slightly higher than the prior quarter.

Following the release of its fourth quarter results, TSMC executives also said the Taiwan-based manufacturer is set to see AI-related revenue grow at a compounded annual rate (CAGR) in the high-50% range through 2029. “We are preparing to increase our capacity and stepping [up] our capex investment to support our customers’ future growth,” TSMC chief executive C.C. Wei said in a call with analysts following the results. “Our conviction in the multiyear AI megatrend remains strong, and we believe the demand for semiconductor[s] will continue to be very fundamental.”

As mentioned previously, TSMC’s solid earnings report also sparked other top chip stocks, reigniting that market. Nvidia (NVDA) shares rallied 2% in early trade, while AMD is also up over 5%. Intel (INTC), meanwhile, is down a fraction of a percent after topping its AI stock rivals to open the week.

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Furthermore, TSMC’s climb also cooled ever-growing concerns of an AI bubble on the stock market. Chief executive Wei said that while the bubble talks made him slightly nervous, he spoke to customers who assured him that the growing AI demand was real. “They show[ed] me the evidence that AI really help[s] their business,” Wei said, adding that “AI is real — not only real, [but it] is starting to grow into our daily life.”

Looking ahead, TSMC (TSM) expects first-quarter 2026 revenue of $34.6 billion to $35.8 billion. Gross margin projects at 63% to 65%, with an operating margin of 54% to 56%, based on current exchange-rate assumptions. The company also said it plans 2026 capital spending of $52 billion to $56 billion, reflecting ongoing investment in advanced semiconductor manufacturing and capacity expansion.