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If the AI era is an arms race, TSMC is the arsenal builder everyone depends on. It has now become the 6th most valuable company in the world, right behind Amazon. In Q3, the narrative was about conviction. In Q4, that conviction translated into the largest capital expenditure plan in the company's history: $52 billion to $56 billion for 2026 (up 30% year-over-year). When asked if the demand is real, CEO C.C. Wei highlighted the stakes:
You don’t spend $56 billion on a hunch. A misstep here would result in empty factories and massive losses. By pulling the trigger, management signals they have clear visibility. They are building because the orders are already there. With 2nm production online and gross margins hitting new highs, the foundry is cementing its lead with hard assets.
Today at a glance:
1. ⚙️ TSMC’s $56 billion betIncome statement:
Revenue by platform:
Revenue by technology:
Cash flow:
Balance sheet:
Q1 FY26 Guidance:
So what to make of all this?
Check out the earnings call transcript on Fiscal.ai here. 2. 📱 Apple picks Gemini for SiriApple has officially selected Google’s Gemini to power the next generation of Siri. This is a multi-year partnership in which Google’s models and cloud infrastructure will serve as the foundation for Apple’s AI features. Unlike the existing integration with OpenAI (which acts like a “phone a friend” chatbot when Siri is stumped), this deal puts Gemini deep inside Siri’s operating logic. 💰 A reverse financial flowFor over a decade, the money has flowed one way: Google pays Apple (an estimated $20+ billion annually) to be the default search engine on the iPhone. This deal flips the script, albeit on a smaller scale. Reports suggest Apple will pay Google ~$1 billion per year. For a company like Apple, $1 billion is a rounding error. But it signals a massive strategic pivot. Apple has effectively decided that spending tens of billions on CapEx to train a frontier model from scratch isn’t the best use of its cash. 🏗️ Aggregation vs. creationThis is a classic “buy vs. build” decision. By white-labeling Gemini:
You likely won’t see the Gemini logo when you use Siri. Apple is treating Google’s model like a component supplier, similar to how it buys screens from Samsung or camera sensors from Sony. It’s Apple Intelligence on the outside, powered by Google on the inside. 📉 ‘Good-enough’ strategyApple is betting that it doesn’t need to have the smartest model in the world at any given time. It just needs one that is reliable.
Reports from the Financial Times suggest OpenAI declined the deal. Sam Altman reportedly refused to become a white-label utility, prioritizing compute for OpenAI’s own future hardware with Jony Ive. This leaves Google to serve as Apple’s invisible backend.
3. 🤖 Zuck launches Meta ComputeWhile Apple is outsourcing its AI brain to Google to stay asset-light, Meta is going asset-heavy on a scale that is hard to comprehend. Meta has established Meta Compute, a new top-level division dedicated to building the physical backbone of the AI era. 🏗️ What is Meta Compute?Zuckerberg is splitting his infrastructure strategy into two clear lanes:
☁️ Build to surviveCrucially, Meta is not trying to become AWS. Zuck isn’t building these data centers to rent servers to startups (a low-margin game where AWS, Azure, and GCP already won). Zuck might have PTSD from Apple's App Tracking Transparency, which nearly derailed his business. He is looking far ahead to ensure history doesn’t repeat itself. Meta is betting that compute (not models) will be the scarce resource of the next decade. By owning the power plants and the silicon, Meta ensures it never has to beg Google or Microsoft for capacity to run its Personal Superintelligence features. 🩸 Reality Labs as a blood sacrificeWall Street generally hates it when Zuckerberg spends billions on sci-fi projects. To buy their patience for this new AI splurge, he had to offer a sacrifice.
Meta has a critical advantage over OpenAI because the ad business already generates massive free cash flow. By refocusing his effort on AI, Zuck can afford to burn billions on GPU clusters while his core business pays the bills. ☢️ The gigawatt obsessionYou will hear this term a lot. Zuckerberg stated Meta plans to build “tens of gigawatts” of capacity this decade. What is a Gigawatt (GW), you ask? It’s roughly the output of a standard nuclear power plant. That’s enough energy to power ~750,000 homes. Meta is effectively trying to build the equivalent of 10 to 50 nuclear power plants’ worth of compute capacity. 👩💼 The nuclear diplomatTo execute this, Zuckerberg just hired Dina Powell McCormick as President and Vice Chair. She was previously a partner at Goldman Sachs and a Trump Deputy National Security Advisor. Why? Because you don’t build all this nuclear power by writing code. You do it by navigating complex government regulations and sovereign wealth deals. She is the political bridge to the physical power Meta needs. Meta also announced huge deals with three nuclear energy providers this week: Vistra, TerraPower (Bill Gates-backed), and Oklo (Sam Altman-backed). The goal is to add 6.6 GW of nuclear capacity by 2035. This is a race against physics and regulation. By hiring a Trump-era diplomat, Zuck wants to ensure the regulatory environment is favorable to this massive buildout.
That's it for today. Happy investing! Want to sponsor this newsletter? Get in touch here.Thanks to Fiscal.ai for being our official data partner. Create your own charts and pull key metrics from 50,000+ companies directly on Fiscal.ai. Start an account for free and save 15% on paid plans with this link. Disclosure: I own AAPL, AMZN, GOOG, META, NVDA, and TSM in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members. Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views. I would love to hear your feedback! Reply to this email to reach out to me with questions or suggestions. If you enjoyed today's newsletter, please share it with your friends and family! You’ll earn rewards if they subscribe. You’re a free subscriber to How They Make Money. For the full experience, become a Premium subscriber.
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Friday, January 16, 2026
⚡️ TSMC: AI Arsenal Builder
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