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Taiwan Semiconductor Manufacturing Company (TSMC) posted a 35% year-over-year profit increase for its fourth quarter, significantly outperforming Wall Street expectations. The high-performance computing division accounted for most of its sales, driven by strong demand for AI and 5G applications. TSMC also raised its 2026 capital expenditure forecast to $52 billion–$56 billion, reflecting heightened investment in AI infrastructure. The results spurred a more than 5% jump in TSMC shares and lifted broader semiconductor stocks.

C3.ai reported Q2 2026 earnings exceeding forecasts, with EPS at -$0.25 versus a -$0.33 forecast. Revenue reached $75.1 million, contributing to a 4.42% stock gain. Subscription revenue increased 16.5% quarter-over-quarter, supported by strategic partnerships with Microsoft and AWS. Despite a non-GAAP operating loss of $42.2 million, the company maintains a strong cash position of $675 million.

TSMC's strong results have reinforced Wall Street's confidence in the AI sector. Analysts like Wells Fargo's Aaron Rakers highlighted the transition from heavy AI training cycles to inference-driven demand, which supports chip sector growth. Rakers upgraded Broadcom and named AMD as top picks for 2026. Wedbush's Matt Bryson also noted TSMC's broad-based strength and recommended derivative plays such as Nvidia and C3.ai.

Why Is AI Infrastructure Demand So Strong?

The high-performance computing segment at TSMC is a key indicator of AI demand. This division includes advanced chips for AI applications, which are essential for data centers and cloud computing. The shift from AI training to inference has driven demand for more efficient and specialized chips, creating a sustained growth environment.

TSMC's capital expenditure increase underscores the scale of investment needed to meet future demand.

The $52 billion–$56 billion forecast for 2026 reflects the company's commitment to maintaining its leadership in semiconductor manufacturing. This spending is expected to benefit not only TSMC but also its clients like Nvidia and AMD, who rely on its fabrication capabilities.

How Did Markets React to TSMC's Report?

TSMC's stock price surged more than 5% following the earnings release, with shares up about 13% year to date. This performance lifted broader AI-related stocks, including a 3% increase in Nvidia and a 1% gain in Broadcom. The VanEck Semiconductor ETF also hit a 52-week high, indicating a broader industry uplift.

C3.ai's stock rose 4.42% to $14.37 after the Q2 report, driven by better-than-expected earnings and revenue. The company's guidance for Q3 and full-year 2026 highlights continued growth potential, despite economic uncertainties and competitive pressures.

What Are Analysts Watching Next?

Analysts are closely monitoring AI infrastructure trends and how they translate into long-term demand for semiconductors. Wells Fargo's Rakers emphasized the transition to inference-driven AI, which is expected to diversify use cases and increase chip consumption. This shift is likely to influence capital spending decisions across the sector.

TSMC's updated growth forecast for AI accelerators from 2024 through 2029 is another key metric under scrutiny. This projection reflects not only near-term demand but also the company's strategic positioning in the AI space. For derivative plays, investors are watching for similar updates from clients like Nvidia and Broadcom, which could signal further momentum.

C3.ai's Q3 guidance of $72–80 million in revenue and its 2026 full-year forecast of $289.5–309.5 million are also focal points. The company's ability to sustain its growth despite ongoing losses will be a key indicator of its long-term viability.

Investors are also assessing how competitive pressures and macroeconomic conditions may affect the AI sector. While the industry remains strong, external factors such as global demand fluctuations and supply chain challenges could introduce volatility. Companies with strong cash positions and diversified partnerships are likely to weather such shifts more effectively.