TSMC Is Up 78%, And Wall Street Still Isn't Buying

Taiwan Semiconductor Manufacturing Company Limited (TSM) posted its most profitable quarter in its history, then gave investors a reason to worry about the next, an unusual combination to say the least.

TSM's new optics business, COUPE, positions it as a critical enabler for AI data center growth, with early adoption by AVGO and NVDA. Management raised 2026 revenue growth guidance to ~40% and increased capital spending plans, underpinned by a robust AI-driven demand outlook. Despite anticipated margin compression from the 2nm ramp and overseas fabs, TSM remains a buy, with valuation still lagging its growth trajectory.