Taiwan Semiconductor Manufacturing Company Ltd. (TSM) shares took a hit in Friday's premarket trading, falling about 3.6% as investors digested the chipmaker's latest earnings and a jaw-dropping capital spending forecast. The company beat expectations again, but the market's focus shifted to the price tag of keeping up with AI demand: $60 billion to $64 billion in 6 capital spending alone.

That's a lot of money, even for the world's most advanced chipmaker. And it's raising questions about whether the AI spending spree is starting to test investor patience.

The Government Steps In

The spending plans also put Taiwan's role as the global semiconductor hub back in the spotlight. After Taiwan Semiconductor announced an additional $100 billion investment in Arizona, the company's home government felt the need to reassure everyone that the most advanced chip technology isn't going anywhere.

Cabinet spokesperson Michelle Lee said Friday that Taiwan Semiconductor's planned construction of 13 leading-edge and advanced packaging fabs in Taiwan will help preserve the country's semiconductor leadership. The government, she added, will continue supporting domestic expansion through land, water, electricity, and energy infrastructure, according to Focus Taiwan.

In other words: Yes, they're building big in the U.S., but Taiwan isn't losing its edge.

The Spending Spree

The government's comments came after Taiwan Semiconductor raised its 2026 capital spending forecast to a range of $60 billion to $64 billion, up from previous expectations. CFO Wendell Huang told analysts that the company's conviction in the AI megatrend remains very strong and that capital spending over the next three years will be significantly higher than in the past three years, Bloomberg reported Thursday.

But investors, it seems, are more focused on the bill than the opportunity. Shares fell in both U.S. and Taipei trading as concerns grew over capital intensity, future margins, and signs of fatigue across AI-related stocks.

Analysts Weigh In

Analysts largely agree that near-term sentiment has turned cautious, but many remain bullish on the longer-term story.

Leonid Mironov of Gavekal Capital told Bloomberg that investors appear to be rotating away from semiconductor stocks after a prolonged run-up in valuations. Morgan Stanley noted that the higher spending partly reflects inflation in semiconductor equipment costs and warned that investors are increasingly focused on the potential impact on profit margins.

But Kevin Wang of Mizuho Securities offered a more optimistic take on CNBC Friday. He called the recent pullback a temporary correction rather than a fundamental shift, arguing that the decline reflects broader semiconductor sector volatility rather than company-specific weakness.

Wang said Taiwan Semiconductor remains fundamentally "very solid" and noted that the stock continues to trade at a valuation discount to many AI peers. He raised his price forecast to 3,150 New Taiwan dollars from 3,000 New Taiwan dollars, citing sustained demand for generative AI servers, CPUs, and application-specific integrated circuits.

The higher capital spending, Wang argued, should support stronger growth over the next two years by expanding advanced manufacturing capacity. He added that the Arizona investment reflects persistent capacity shortages and growing demand from global customers. While geopolitical risks and competition from Samsung Electronics (SSNLF) and Intel (INTC) remain factors, Wang said strong U.S. demand for advanced AI chips is the primary commercial driver behind Taiwan Semiconductor's investment plans.

Price Action

Taiwan Semiconductor shares were down 3.63% at $394.86 during premarket trading on Friday, according to market data.