Taiwan Semiconductor (TSM) just dropped an important clue that should excite the resurgent AI stock bulls.

“AI-related demand continued to be extremely robust,” Taiwan Semiconductor CEO C.C. Wei told analysts on a conference call on Thursday. “The shift from generative AI and the query mode to agentic AI and … the action mode is leading to another step up in the amount of tokens being consumed. This is driving the need for more and more computation, which supports the robust demand for leading-edge silicon.”

“Our customers and customers of customers, the cloud service providers, continue to provide us with their very strong signal and positive outlook,” Wei continued. “Thus, our conviction in the multiyear AI megatrend remains high, and we believe the demand for semiconductors will continue to be very fundamental,”

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TSMC is the world’s largest dedicated independent semiconductor foundry, producing the vast majority of the world’s most advanced processors. Its top three customers include Apple (AAPL), Broadcom (AVGO), and Nvidia (NVDA).

The fact that TSMC hasn’t seen any slowdown in AI-related demand bodes well for the financials of its customers and many players further downstream. And by extension, their stock prices.

Wei added, “Moving into the second quarter of 2026, we expect our business to be supported by continued strong demand for our leading-edge process technologies.”

Shares declined 1% in premarket trading.

A lot of the momentum detailed by Wei was on display in the company’s first quarter earnings release today.

The company posted a record net profit of 572.5 billion New Taiwan dollars ($18.15 billion), up a healthy 58.3% over the same period last year. Revenue for the quarter surged 35% to $35.9 billion, fueled by “insatiable” global demand for AI infrastructure.

The foundry’s profitability was particularly notable amid memory chip price inflation. Its gross profit margin expanded to 66.2%, significantly beating its own guidance.

Executives raised their full-year revenue growth forecast to over 30%.

Wei also signaled that TSMC is leaning toward the high end of its $56 billion capital expenditure budget for the year to support the AI infrastructure buildouts of its customers.

“Another positive quarter. Reiterate Overweight rating,” Barclays analyst Simon Coles said in a note.

Brian Sozzi is Yahoo Finance’s Executive Editor and a member of Yahoo Finance’s editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.