TSMC surge fuels chip rally as banks deliver solid profits

Stocks climbed broadly after a renewed burst of demand optimism from the semiconductor sector and a tidy finish to big‑bank earnings. Taiwan Semiconductor Manufacturing Co. reported record fourth‑quarter results and bullish spending plans that sent chipmakers and equipment suppliers sharply higher, while Goldman Sachs and Morgan Stanley posted stronger quarterly profits that helped lift financials.

TSMC said it delivered a fourth‑quarter profit of NT$505 billion on revenue above NT$1 trillion, a roughly 35 percent year‑over‑year jump in profit as AI‑driven chip demand continued to firm. The company flagged robust annual growth and plans to boost capital spending substantially, planning roughly $56 billion in investment for 2026 and forecasting at least a 25 percent increase in equipment and infrastructure outlays. TSMC also flagged expansion of U.S. manufacturing capacity as part of that program.

Markets reacted quickly. U.S.‑listed TSMC shares rose between about 4.4 percent and 7 percent in extended trade, and the wider chip group followed. Nvidia climbed roughly 2.5 percent, Broadcom about 2.3 percent and Micron near 3 percent. Chipmaking‑equipment suppliers posted larger gains: Applied Materials and KLA jumped more than 8.5 percent each, and Lam Research added about 6.3 percent as investors priced in the higher equipment spending that TSMC outlined.

The technology sector benefited beyond pure semiconductors. The information‑technology complex rose as traders sought tangible evidence that AI workloads are translating into concrete capital budgets, reversing some of the recent profit taking that had depressed prices in late 2025 and early 2026.

Financial results from major banks provided a complementary lift. Goldman Sachs and Morgan Stanley reported quarterly profit increases, helped by a wave of deal activity, and both stocks rose after the announcements. BlackRock rallied after posting record assets under management of $14.04 trillion for the quarter, a boost to fee income tied to market gains. Market commentary said the bank earnings were "pretty much as expected," helping to close out a solid reporting season for large U.S. banks.

Indexes finished higher on the day. The Dow Jones Industrial Average rose about 0.75 percent, the S&P 500 gained roughly 0.67 percent and the Nasdaq Composite added about 0.92 percent. Broader market breadth showed rotation into cyclical tech and financial names, suggesting investors were willing to buy risk after recent weakness. "Stocks are reacting positively," said Robert Pavlik, senior portfolio manager at Dakota Wealth, capturing the cautious return of buyers.

A snapshot of market levels showed elevated global index readings alongside benign commodity moves: the S&P 500 around 6,944, the Nasdaq near 23,530 and the Dow about 49,442. Crude oil traded near $59.09 a barrel and spot gold around $4,596 an ounce, reflecting muted inflationary pressure in commodity markets even as equity investors shifted toward growth through capex and M&A.

Policy and market implications are clear. TSMC’s capital plan reinforces a longer‑term trend of shifting semiconductor investment toward onshore capacity and higher equipment intensity, supporting chip supply chains and U.S. manufacturing employment. For investors, the combination of tech capex visibility and stable bank earnings reduces near‑term recession risk, but markets will continue to watch actual spending flows and macro data for confirmation of a durable upcycle.