TSM

Taiwan Semiconductor's (TSM) third quarter results showed just how big the AI boom is getting. The company continues to invest billions to maintain its lead, and these investments are now bringing in steady profits. Yet, it wasn't enough to lift the stock. Although TSM shares are up 38% year-to-date (YTD), the broader AI selloff has dragged down the stock the last few days despite a blowout quarter. As TSMC ramps up its costly 2nm technology, expands overseas manufacturing, and prepares for the next wave of AI demand, protecting profit margins could become its next big challenge. - No 'Example Anywhere on the Planet': Billionaire Kevin O'Leary's Utah Data Center Could Use Enough Electricity to Power 16 Million People - Dear GE Aerospace Stock Fans, Mark Your Calendars for October 20 - Dear Nvidia Stock Fans, Mark Your Calendars for October 20 - Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! Revenue soared 41.2% year-over-year (YoY) to $46.7 billion in the third quarter, rising 16.2% sequentially. Taiwan Semi's earnings also increased 68.7%. High-performance computing, which includes much of the infrastructure needed for AI, was the key driver. This business grew 22% sequentially and represented 68% of third-quarter revenue. Smartphone-related revenue also rose 10% from the previous quarter and accounted for 21% of the total. TSMC is benefiting from AI investment without relying exclusively on one end market, although high-performance computing is clearly doing most of the heavy lifting. The company has shown strong momentum this year, with revenue up 40.6% and 33.7% in the first two quarters. Management expects about 58% YoY growth in the fourth quarter, bringing full-year revenue growth to 44%. This shows how strong demand for advanced semiconductor manufacturing is driving earnings growth. Yet the market seems overly focused on higher capital spending and the AI debt burden. However, not all AI-connected companies are heavily burdened with debt like Coreweave (CRWV). TSMC is the world's leading contract chipmaker, manufacturing advanced semiconductors for some of the biggest names in technology, including Nvidia (NVDA), AMD (AMD), Broadcom (AVGO), and Apple (AAPL). Its reach across AI accelerators, smartphones, and other high-performance computing applications gives it exposure to multiple sources of chip demand. As long as its customers continue to grow their businesses and invest in new products, TSMC's capacity investments have a stronger opportunity to generate returns. For now, Taiwan Semi's balance sheet remains strong to fund its expansion. In the third quarter, it held about $126 billion in cash and marketable securities. While risks like overbuilding capacity or margin pressure remain, TSMC stands apart from highly leveraged AI infrastructure providers. The company's gross margin fell 66.4% in the third quarter, from 67.7% in the second quarter. Management attributed this decline to the initial ramp-up of its 2-nanometer process technology. Operating margin was 58.7%, while net profit margin stood at 51.1%. The company spent $13.8 billion on capital expenditures in Q3. In the third quarter, 2nm technology made up 8% of wafer revenue. The 3 nm process contributed 33%, 5nm brought in 28%, and 7 nm accounted for 10%. Altogether, technologies at 7nm and below generated 79% of wafer revenue. This shows that most of TSMC's revenue comes from making advanced chips. As TSMC moves to newer technologies like 2nm, making chips overseas is becoming more costly. If these new chips generate enough revenue to cover the higher costs, TSMC's profits should stay strong. But if costs rise faster than revenue, profit margins could shrink. Management expects a fourth-quarter gross margin between 65% and 67%, with 66% as the midpoint. TSMC confirmed its 2026 capital spending budget of $60 billion to $64 billion. The company expects its spending from 2026 to 2028 to be much higher than in the past three years. This investment is meant to keep up with rising demand for advanced chips, especially those used in agentic AI. TSMC's main challenge now is that, even though sales are growing faster, the company still faces short-term margin pressure as it launches new technology. This does not mean TSMC's strategy is going off track. Instead, it strongly suggests that the costs of preparing for future growth come before the profits from that growth appear. CEO C.C. Wei is still optimistic about demand for AI accelerators, CPUs, and networking chips and expects the company's annual 2nm capacity to more than double by 2027. Analysts covering TSMC expect its earnings to increase by 64% in 2027, followed by another 33.6% in 2028. On Wall Street, TSM stock holds a consensus "Strong Buy" rating. Out of 19 analysts with coverage, 16 rate TSM as a "Strong Buy," two have a "Moderate Buy" rating, and one analyst offers a "Hold" rating. The average price target of $530.50 suggests the stock can gain 26% from current levels. The high target price of $670 implies a potential upside of 59% over the next 12 months. The next few quarters will show if Taiwan Semi can keep growing as it manages the costs of expansion. Investors should look for any ongoing pressure on gross margins and pay attention to the 2nm ramp-up. It is also smart to track capital spending and cash generation. The returns will depend on overseas fab costs, production efficiency, and customer demand. By 2027, revenue growth and margins should give a better sense of how the company is doing. Overall, TSMC is in a strong position for long-term growth thanks to its lead in advanced chip manufacturing. The company now controls about 73% of the global pure-play foundry market. As chips get more complex, TSMC's experience and size may give it an even bigger edge over competitors. On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

The bulls started buying again on Monday as third-quarter earnings season starts to ramp up, with reports out from Meta, Tesla, and others in the coming days. No matter what happens this week, the world's largest semiconductor maker and one of the most important companies in the world, Taiwan Semiconductor, reported a strong beat-and-raise Q3 on October 15. TSMC physically builds and manufactures almost all the cutting-edge semiconductors for Nvidia and most other AI giants. Taiwan Semi upped its guidance, citing "continued strong demand for our leading-edge process technologies, including the steep ramp-up of our 2-nanometer technology." This backdrop signals that the AI spending boom remains full steam ahead, at least for the biggest and most important players in the industry. Looking at the full year, total S&P 500 earnings are expected to grow by +28.8% in 2026 on +9.8% higher sales, with growth projected in 15 out of 16 sectors. Better still, S&P 500 earnings are projected to grow another 19.0% in 2027 and 16.9% in 2028. This backdrop means that investors who can handle some near-term swings might want to buy best-in-class stocks right now as Q3 earnings season heats up. Let's explore how investors can use a Zacks screen to help find a handful of the best Zacks Rank #1 (Strong Buy) stocks out of a group of over 200 highly ranked stocks to buy right now and throughout the rest of 2026 and beyond. Zacks Rank Basics Zacks Rank #1 (Strong Buy) stocks outperform the market in good and bad times. However, there are over 200 stocks that earn a Zacks Rank #1 at any given time. Therefore, it's helpful to understand how to apply filters to the Zacks Rank in order to narrow the list down to a more manageable and tradable set of stocks. There are only three items on this screen. But together, these three filters can result in some impressive returns. • Zacks Rank equal to 1 Starting with a Zacks Rank #1 is often a strong jumping off point because it boasts an average annual return of roughly 24.4% per year since 1988. • % Change (Q1) Est. over 4 Weeks greater than 0 Positive current quarter estimate revisions over the last four weeks. • % Broker Rating Change over 4 Week equal to Top # 5 Top 5 stocks with the best average broker rating changes over the last four weeks. This strategy comes loaded with the Research Wizard and is called bt_sow_filtered zacks rank5. It can be found in the SoW (Screen of the Week) folder. Here is one of the five stocks that qualified for the Filtered Zacks Rank 5 strategy today… Shinhan Financial Group Co SHG is one of South Korea's largest banks and financial institutions. It handles everyday banking (checking accounts, savings, and loans), credit cards, stock trading and investment banking, insurance, and money management for both consumers and businesses. Image Source: Zacks Investment Research Shinhan Financial benefits from its dominant position in South Korea's large and stable banking market. On top of that, its wealth management, insurance, and other segments provide upside. It is also expanding outside of South Korea into countries like Vietnam, Japan, India, and beyond. SHG is projected to expand its revenue by 12% in 2026 and another 8% next year to reach $13.93 billion. The South Korean financial services giant is also expected to grow its adjusted earnings by 33% in FY26 and 12% next year. Plus, Shinhan Financial's earnings outlook has jumped since its last report, with its upward EPS revisions earning it a Zacks Rank #1 (Strong Buy). Image Source: Zacks Investment Research The stock has climbed 105% in the last five years to blow away the Zacks Finance sector's 44%. SHG is up 35% in the past 12 months to outpace its highly ranked Banks – Foreign industry, which is in the top 23% of roughly 250% Zacks industries. Investors can buy Shinhan Financial down 18% from its early September highs, while its average Zacks price target implies 41% upside. The dividend-paying stock is attempting to find support right now at its 200-day moving average. Shinhan Financial is also trading at its most oversold RSI levels in the last 12 months. Get the rest of the stocks on this list and start looking for the newest companies that fit these criteria. It's easy to do. And it could help you find your next big winner. Start screening for these companies today with a free trial to the Research Wizard. You can do it. Click here to sign up for a free trial to the Research Wizard today. Want more articles from this author? Scroll up to the top of this article and click the FOLLOW AUTHOR button to get an email each time a new article is published. Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. Disclosure: Performance information for Zacks' portfolios and strategies are available at: www.zacks.com/performance_disclosure Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Shinhan Financial Group Co Ltd (SHG) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The third-quarter results for Taiwan Semiconductor Manufacturing (NYSE: TSM) are in, and investors have plenty of reasons to be excited. TSMC reported Q3 revenue of $46.72 billion, a 41.2% increase from a year ago. Net income jumped 68.7%, while the company's gross profit margin reached 66.4%. Those are impressive numbers by any measure, particularly for a company of TSMC's size. But there's another figure buried in the company's earnings presentation that I think is even more important. High-performance computing (HPC) accounted for a whopping 68% of TSMC's quarterly revenue, with sales in that business increasing 22% from Q2. Missed AI's "Act 1"? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue » That tells us quite a bit about where TSMC's growth is coming from -- and why its artificial intelligence (AI) business remains such an important opportunity for investors. TSMC is the biggest chip foundry in the world, manufacturing chips for companies such as Nvidia, Advanced Micro Devices, and Apple. TSMC has an overwhelming 72.5% of the global market share and, in 2025, produced more than 12,600 products using 305 separate process technologies. That business model gives TSMC an interesting advantage. It doesn't necessarily have to predict which chip designer will come out on top because it can manufacture chips for competing companies. And increasingly, those chips are being used for high-performance computing. HPC includes processors used in AI accelerators, data centers, and other demanding computing applications. It's a broader category than artificial intelligence alone, but AI is an important driver of demand for the advanced chips that TSMC manufactures. In Q3, HPC generated more than two-thirds of the company's revenue compared with just 21% from smartphones. And while TSMC's overall revenue increased 16.2% sequentially, HPC revenue grew even faster at 22%. The growth also comes as major technology companies continue investing in the computing infrastructure needed to train and operate increasingly powerful AI models. Those investments create demand for advanced processors, and TSMC manufactures many of the chips used in those systems. The growth in high-performance computing is particularly encouraging given the technology behind those chips. TSMC said that its advanced manufacturing processes, which include 7-nanometer technology and smaller, accounted for 79% of Q3 wafer revenue. Its newest 2-nanometer technology already represented 8% of wafer revenue, while 3-nanometer chips accounted for another 33%. Here's why that's important: Smaller manufacturing processes mean that chips can be more powerful and efficient, which are important qualities for AI data centers, where computing performance and electricity consumption can have a substantial effect on operating costs. That's one reason I've remained bullish on TSMC. Its manufacturing capabilities give the company a competitive advantage that's difficult to duplicate, while demand for advanced computing continues to expand. And the latest results suggest that customers are putting those capabilities to work. TSMC expects Q4 revenue between $52.3 billion and $54.3 billion, indicating that management anticipates another sequential increase in sales. For the full year, the company now expects revenue growth of approximately 44% in U.S. dollars. While the current pace of AI infrastructure spending won't continue indefinitely, guidance from major chipmakers indicates an ongoing appetite for more advanced AI processors -- and that should keep profits rolling in for TSMC. With HPC now accounting for 68% of revenue and growing faster than the rest of the business, TSMC is demonstrating just how valuable that position has become. That's the number I'd pay the most attention to in this earnings report. Before you buy stock in Taiwan Semiconductor Manufacturing, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $380,363!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,315,732!* Now, it's worth noting Stock Advisor's total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 19, 2026. Patrick Sanders has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy. Opinion: The Most Important Number in Taiwan Semiconductor's Earnings Report Was 68% was originally published by The Motley Fool

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) closed at $422.25 on October 15. The stock has returned 16.21% over the last six months, compared to a 15.4% return for the Insider Monkey Billionaire Index and 11.4% for the State Street SPDR S&P 500 ETF Trust. Taiwan Semiconductor does not design chips. It builds them for the companies that do. Nvidia, Apple, Broadcom and most of the names associated with artificial intelligence send their designs here and take finished silicon away. That makes it the one company in the industry almost nobody can route around. It reported third-quarter results on October 15, and they were the strongest in the company's history. READ ALSO: 10 Best Semiconductor Stocks to Buy According to Billionaires Revenue came to $46.72 billion, above the range management had guided to three months earlier. Net profit rose 68.7%, faster than revenue did. Profit rose faster than revenue did. For a company whose costs are mostly the factories themselves, that gap is what appears when the plants run full. The margin is the detail worth holding onto. Gross margin reached 66.4% while the company was starting mass production on its newest process. A new process normally costs margin before it earns any, because yields begin low and the equipment is paid for whether it produces or not. Taiwan Semiconductor appears in our 10 Most Promising Technology Stocks to Buy Right Now, where analysts see more room in several of the companies it manufactures for. To see the other nine, click HERE. DON'T MISS: 14 AI Stocks Making Headlines on Wall Street: Qualcomm, Microsoft, and More The customer list is the risk and the strength at once. A handful of companies account for an enormous share of the advanced capacity, and their spending plans are set a year or more ahead of the orders reaching Taiwan. Then there is the thing no spreadsheet handles. The company's most advanced plants sit on an island whose political status is disputed, and no amount of capacity built in Arizona or Japan changes where the centre of gravity is today. The shares change hands at 21.41 times what analysts expect next year, against 33.67 times what the company actually earned. The gap is the market pricing in another large step up in profit, which is the same thing the quarter just delivered. What that price buys is a position almost nobody can go around, attached to a customer list that can change its mind. The multiple is not demanding for the growth. It is demanding of the assumption that the spending behind it keeps coming. Check out: 10 Best Mortgage Finance Stocks To Buy According to Billionaires The quarter did the most a quarter can do. Revenue beat the guidance, margins held through a difficult process change, and the outlook went up rather than down. None of that answers whether the customers keep spending at this pace, and the investment case runs mostly through their budgets rather than through anything the company controls. Watch what the designers say about next year, because that is what fills these factories. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was held by 249 hedge funds with a combined stake value of about $50.48 billion at the end of Q2 2026 in the Insider Monkey database. This is up from 234 hedge fund holders with a cumulative investment value of around $39.22 billion in the previous quarter. While we acknowledge the potential of TSM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 10 Most Promising Technology Stocks to Buy Right Now and 10 Best Semiconductor Stocks to Buy According to Billionaires This article is originally published at Insider Monkey.

Taiwan Semiconductor Manufacturing (NYSE: TSM) is up about 39% year-to-date as of Oct. 15, 2026, compared to about 13% for the S&P 500. The world's largest contract chipmaker, which manufactures processors for many of the biggest names in tech, just reported record quarterly revenue. And the stock could keep climbing for one reason: Demand for AI chips is still outpacing TSMC's ability to make them. Missed AI's "Act 1"? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue » Third-quarter revenue surged 41% over the year-ago quarter, reaching $46.7 billion. Its high-performance computing business, which includes artificial intelligence (AI) data center chips, made up 68% of sales. Management expects fourth-quarter revenue of $52.3 billion to $54.3 billion, representing year-over-year growth of about 58% at the midpoint. TSMC had forecast that sales of AI accelerators (the specialized chips that train and run AI models) would grow at a mid- to high-50s percentage rate annually through 2029. On the Oct. 15 earnings call, Wei said, "It probably will be higher," adding that demand is "still far above our capability today to supply." Wei also said that TSMC is planning cautiously for 2027, given macroeconomic uncertainty. Rising component prices are pressuring demand in consumer electronics markets, as device makers raise prices to offset cost inflation. This could put pressure on TSMC's smartphone business, which accounted for 21% of third-quarter revenue. Still, surging demand for AI chips remains the growth engine for TSMC. The stock trades at about 19 times analysts' 2027 earnings estimates, while Wall Street expects earnings to grow 38% annually over the next several years. That's an attractive valuation for the prospect of high double-digit earnings growth, making the stock a compelling buy now. Before you buy stock in Taiwan Semiconductor Manufacturing, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $380,363!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,315,732!* Now, it's worth noting Stock Advisor's total average return is 919% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 18, 2026. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy. 1 Reason TSMC Stock Could Rally After Its Record Quarter was originally published by The Motley Fool

The recent selloff in technology and semiconductor stocks has created potential buying opportunities, particularly among companies benefiting from the artificial intelligence (AI) infrastructure boom. Taiwan Semiconductor Manufacturing Company TSM) stands out after delivering better-than-expected third-quarter results on Thursday and issuing upbeat Q4 guidance, reinforcing its position as a leading supplier of advanced chips. With strong earnings momentum and a favorable growth outlook, TSM may be an attractive stock to consider following the recent market pullback as shares have fallen 9% this month but are still up 36% year to date. Image Source: Zacks Investment Research Fueled by surging demand for advanced chips used in AI infrastructure, Taiwan Semiconductor's Q3 earnings reached a quarterly record of $4.60 per share, beating the Zacks Consensus Estimate of $4.45 by 3% and climbing 57% from EPS of $2.92 a year ago. This came as Q3 revenue surged 41% year over year to a quarterly peak of $46.72 billion, surpassing expectations of $45.61 billion. Gross margin remained robust at 66.4%, while operating margin reached 58.7%. Notably, advanced semiconductor technologies accounted for 79% of wafer revenue, reflecting strong demand from major customers such as Nvidia NVDA), Apple AAPL), and Advanced Micro Devices AMD). It's also noteworthy that Taiwan Semiconductor has now exceeded earnings expectations for a remarkable 24 consecutive quarters, with an average EPS surprise of 7.78% in its last four quarterly reports. Image Source: Zacks Investment Research Looking ahead, TSMC projected Q4 revenue of $52.3-$54.3 billion, implying 58% YoY growth at the midpoint and comfortably exceeding Wall Street's expectations of roughly $50.22 billion. The company also anticipates gross margins of 65%-67%, signaling continued profitability as it expands production of next-generation chips. At current levels of around $412 a share, TSM trades at 25X forward earnings, representing only a modest premium to the benchmark S&P 500 and the broader Zacks Computer and Technology sector's 23X. Considering Taiwan Semiconductor is the world's largest dedicated semiconductor foundry provider and a critical supplier to leading AI chipmakers, this valuation still appears reasonable given its impressive earnings growth and favorable outlook. Image Source: Zacks Investment Research Despite recent selling pressure across semiconductor stocks, Taiwan Semiconductor's Q3 earnings beat and upbeat Q4 guidance reinforce its position as a leading beneficiary of the AI infrastructure boom. With accelerating demand for advanced chips and encouraging growth prospects, TSM currently sports a Zacks Rank #2 (Buy), supported by favorable earnings estimate revisions that could gain further momentum following its impressive Q3 report. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report Apple Inc. (AAPL) : Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

- Price change for TSMC stock in last 6 months: 16% - $TSM Stock Price as of Oct. 15: $75 - 52-Week High: $81 - $TSM Stock Price Target: $103 Taiwan Semiconductor Manufacturing (TSM:NYSE) posted a record third quarter on Thursday, beating estimates and driven by strong demand for AI chips. It was the sixth straight quarter of record net profit. - Revenue was NT$1.49 trillion, ahead of the NT$1.47 trillion expected. - Net income was NT$763.1 billion, up 68.7% from last year. - Operating margin was 58.7%, above the top of the company's guidance. TSMC expects Q4 revenue of $52.3 billion to $54.3 billion. At the midpoint, that is up 14% from Q3 and 58% from a year ago. Full-year revenue growth is now expected at around 44% in U.S. dollars. Here is where the sales came from: - 3-nanometer chips were the biggest piece at 33% of wafer revenue. - High-performance computing made up 68% of revenue. - Smartphones made up 21%. - Automotive grew fastest, up 23% from Q2. Free cash flow jumped to NT$476.56 billion, from NT$139.38 billion a year ago. The message is simple: demand is running ahead of supply. CEO C.C. Wei said demand still exceeds TSMC's production capacity and emphasized that the company is working hard to narrow the gap. TSMC is spending heavily to keep up and plans to spend $60 billion to $64 billion on capital this year. It expects spending from 2026 to 2028 to be much higher than the last three years. Expansion in the U.S. is also moving. The second Arizona fab is being built, and tools are being installed. Production should start in Q3 2027, slightly ahead of schedule. TSM stock faces certain risks. Gross margin slipped 1.3 percentage points to 66.4% as it ramps up its new 2-nanometer chips. Overseas fabs also cost more to run, and TSMC expects that drag to grow to 3 to 4 points in the next few years. Management also said consumer and price-sensitive markets are under pressure from higher component costs. It is being careful in its 2027 planning. Still, the numbers show a company with strong pricing power and a full order book. For now, TSM stock is tied closely to the AI buildout. TIKR lets you forecast the future price of any stock in less than a minute. Just enter a few assumptions into TIKR's valuation model and see what TSM stock could be worth. Start from Wall Street consensus estimates, or adjust the inputs to reflect your own view of the business. It's free to use. Value TSMC for free→

This article first appeared on GuruFocus. - Revenue: Q3 2026 revenue rose 17.6% sequentially in NT and 16.2% sequentially in US dollars to $46.7 billion, above the high end of guidance. - Gross Margin: Q3 2026 gross margin decreased 1.3 percentage points sequentially to 66.4%, mainly due to 2-nanometer ramp dilution. - Operating Expenses: Total operating expenses accounted for 7.8% of net revenue. - Operating Margin: Q3 2026 operating margin was 58.7%. - EPS: Q3 2026 EPS reached TWD29.43. - ROE: Q3 2026 ROE was 45.5%. - Revenue by Technology: 2-nanometer contributed 8% of wafer revenue; 3-nanometer 33%; 5-nanometer 28%; 7-nanometer 10%; advanced technologies (7nm and below) accounted for 79% of wafer revenue. - Revenue by Platform: HPC increased 22% QoQ to 68% of revenue; Smartphone increased 10% to 21%; IoT increased 5% to 4%; Automotive increased 23% to 4%; DCE declined 12% to 1%. - Cash and Marketable Securities: Ended Q3 2026 with TWD4 trillion (USD126 billion). - Current Liabilities: Increased TWD110 billion QoQ, mainly due to TWD46 billion in current portions of bond payable and bank loans and TWD26 billion in dividend payable. - Accounts Receivable Turnover Days: Decreased by 1 day to 28 days. - Inventory Days: Decreased by 5 days to 82 days, primarily due to increased wafer shipment. - Cash from Operations: Generated about TWD920 billion in Q3 2026. - CapEx: Q3 2026 capital expenditures totaled TWD443 billion (USD13.8 billion). - Dividends: Distributed TWD156 billion for fourth quarter 2025 cash dividends. - Cash Balance: Increased TWD488 billion to TWD3.6 trillion at end of quarter. - Q4 2026 Revenue Guidance: Expected between USD52.3 billion and USD54.3 billion, representing a 14% sequential increase or 58% year-over-year increase at the midpoint. - Q4 2026 Gross Margin Guidance: Expected between 65% and 67%. - Q4 2026 Operating Margin Guidance: Expected between 56.5% and 58.5%. - Full Year 2026 Revenue Growth: Expected around 44% year-over-year in US dollar terms. - Full Year 2026 Capital Budget: Reiterated between USD60 billion and USD64 billion. - Overseas Fab Margin Dilution: Expected closer to 2% for full year 2026; expected to widen to 3% to 4% in the next few years. - Warning! GuruFocus has detected 5 Warning Signs with ACXIF. - Is TSM fairly valued? Test your thesis with our free DCF calculator. Release Date: October 15, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. - Third quarter revenue increased 16.2% sequentially to $46.7 billion, exceeding the high end of guidance, driven by strong demand for leading-edge process technologies. - Advanced technologies (7nm and below) accounted for 79% of wafer revenue, with 2nm contributing 8%, 3nm 33%, 5nm 28%, and 7nm 10%, demonstrating technology leadership. - HPC platform revenue grew 22% quarter-over-quarter, representing 68% of total revenue, fueled by robust AI-related demand. - Fourth quarter revenue guidance of $52.3-$54.3 billion implies a 14% sequential increase and 58% year-over-year growth, reflecting continued strong momentum. - Full year 2026 revenue growth expected around 44% year-over-year in US dollars, with AI demand extremely robust and no signs of slowdown. - Capital budget for 2026 reiterated at $60-$64 billion, with CapEx from 2026 to 2028 expected to be significantly higher than the past three years to support customer growth. - N2 technology ramping successfully with good yield, and annual capacity expected to more than double in 2027, supported by smartphone and HPC/AI applications. - A14 technology risk production on track for 2027 and volume production in 2028, with more customer activity than N2 at similar stage, indicating strong future demand. - Advanced packaging solutions are highly competitive, with 5x reticle size in volume production and development for 9x and 14x reticle sizes underway. - Commitment to sustainable and steadily increasing cash dividend per share on both annual and quarterly basis, returning value to shareholders. - Gross margin decreased 1.3 percentage points sequentially to 66.4% in Q3 2026, primarily due to margin dilution from the initial ramp-up of 2nm technology. - Fourth quarter gross margin guided to decrease further to 66% at the midpoint, due to continued margin dilution from steep 2nm ramp and overseas fabs. - Overseas fab margin dilution expected to widen to 3-4% in the next few years, up from closer to 2% in 2026, impacting overall profitability. - Consumer and price-sensitive end market segments are being challenged by rising component prices and economic uncertainties, leading to prudent business planning for 2027. - Tool supply is tight, and tool price inflation is real, which could increase capital expenditures and pressure costs. - Capital intensity remains high, with CapEx significantly higher than past three years, and no dramatic increase in profitability expected overnight. - High NA EUV adoption planned for 2030, later than some competitors, potentially raising concerns about technology leadership timing. - Power supply situation is a consideration factor in capacity planning, though currently assessed as manageable. - AI demand calculation uses a narrow definition excluding CPUs, so the full extent of AI-related demand may not be fully captured in reported figures. - Pricing strategy is strategic and varies by market segment, location, and technology, with US production costs higher than Taiwan, potentially affecting margins. Q: Laura Chen of Citi asked how TSMC views the AI revenue CAGR given aggressive AI semiconductor demand, and how it reconciles customer capacity requirements with concerns over data center power availability, funding, HBM, advanced packaging, and laser tightness.A: Chairman C.C. Wei explained that TSMC runs a sophisticated and disciplined capacity planning process, factoring in CSP CapEx, data center build-out, power supply, and other supply chain components. Based on its assessment, demand still exceeds supply, and TSMC is working hard to narrow the gap. CFO Wendell Huang added that demand is extremely robust with no sign of slowdown, and the AI accelerator CAGR will probably be higher than the previously guided mid- to high 50s percentage from 2024 to 2029. Q: Gokul Hariharan of JPMorgan asked whether wafer supply tightness in 2027 could be even greater than in 2026, and whether TSMC's wafer capacity growth could approach or exceed 10% in the next couple of years.A: C.C. Wei said demand is extremely robust and getting higher, with TSMC checking data center build-out and customer demand from multiple angles. The gap between demand and supply remains quite big, and TSMC is putting all its strength into increasing capacity. Wendell Huang added it is too early to discuss capacity increase percentages, but advanced nodes are the main driver of capacity growth. Q: Gokul Hariharan of JPMorgan also asked about TSMC's more aggressive overseas expansion, including potential new fab clusters in Texas and engagement with a customer's Terafab project.A: C.C. Wei confirmed TSMC is expanding in the US because most large customers are there and the US government is helpful. TSMC has evaluated locations outside Arizona, including Texas, and is in discussions with a customer about potentially utilizing Terafab capacity. He emphasized that any such fab must be run by TSMC, and more details will be shared once discussions conclude. Q: Krish Sankar of TD Cowen asked about a secondary wafer market where customers pass wafer allocation to others, and whether TSMC allows this practice.A: C.C. Wei stated this is not a new strategy and TSMC does not allow customers to sublet or auction off capacity. In certain cases, customers can collaborate through mask licensing agreements, but this is not common practice and the amount is very small. Q: Krish Sankar of TD Cowen also asked whether adopting High NA EUV later than competitors, around 2030, puts TSMC at a competitive disadvantage.A: C.C. Wei said TSMC always evaluates new tools for best technology, reasonable cost, and maturity. TSMC plans to use High NA in 2030 when it believes the tool will be mature and cost-effective, and is working with ASML on a 12-inch photomask by 2031. He emphasized TSMC remains confident it is still the best company to offer the most advanced technology to customers. Q: Charlie Chan of Morgan Stanley asked about an IDM customer spending aggressively on capacity and whether A14 could still be a bigger node than N2 despite potential insourcing.A: C.C. Wei said TSMC treats every customer fairly, whether IDM or fabless, and takes internal customer capacity into consideration. TSMC has seen more customer activity for A14 than for 2-nanometer so far and expects A14 to be a bigger node than N2. He declined to comment on specific customer outsourcing plans but guaranteed TSMC takes everything into consideration. Q: Charlie Chan of Morgan Stanley also asked about advanced packaging, including whether TSMC's SoW 3.5D can catch customers moving to larger reticle sizes like 14x, and whether TSMC would support customers if they cannot get sufficient capacity from a competitor's EMIB-T solution.A: C.C. Wei said TSMC's advanced packaging technology is very competitive, with the top priority being to help customers' products reach the market smoothly with best technology and enough capacity. TSMC is in real-world production of 5x reticle size with excellent yield, working on 9x and moving to 14x reticle size. CoWoS remains the number one choice for customers, and TSMC remains very competitive. Q: Sunny Lin of UBS asked how to think about CapEx beyond 2026, including whether CapEx could grow faster than or in line with sales, and whether tool price inflation is a meaningful variable for 2027 CapEx.A: Wendell Huang said it is too early to share CapEx numbers beyond this year, but TSMC has strong conviction in the AI megatrend, and CapEx from 2026 to 2028 is expected to be significantly higher than the past three years. Tool price inflation is real, but the majority of CapEx is related to long-term demand. He added that if TSMC does its job right, revenue growth will outpace CapEx growth. Q: Sunny Lin of UBS also asked about the wider 3% to 4% overseas margin dilution starting in 2027, and whether Arizona expansion is being accelerated.A: Wendell Huang said TSMC is doing everything it can to increase capacity and accelerating everywhere, including in the US. The 3 to 4 percentage point margin dilution from overseas fabs in the latter part of the five-year period remains the case. Q: Haas Liu of Bank of America asked about potential shifts in AI demand mix toward more efficient compute solutions, including agentic AI CPUs and networking switches, and the incremental opportunity for TSMC's manufacturing and packaging business.A: C.C. Wei said AI demand is extremely robust, whether from accelerators or CPUs, and TSMC has seen demand from agentic AI CPUs continue to increase. In TSMC's judgment, demand is still far above its ability to supply, and TSMC is working hard to narrow the gap. Q: Haas Liu of Bank of America also asked whether supporting both conventional power delivery and super power rail technology at future nodes makes the yield learning curve more challenging and impacts gross margins.A: C.C. Wei said the situation is different from previous years, with strong demand from both smartphone and AI HPC applications, and smaller die sizes and large accelerator die sizes happening at the same time. This is to TSMC's advantage because it has been prepared for this, results are excellent, and customers are very happy. Q: Arthur For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Taiwan Semiconductor Manufacturing Co. TSM reported record third-quarter earnings that exceeded analyst expectations, as robust global demand for artificial intelligence (AI) chips continued to drive growth at the world's largest contract chipmaker. TSMC's third-quarter revenues of NT$1.49 trillion ($46.36 billion) topped the Zacks Consensus Estimate of $45.62 billion. TSMC reported third-quarter 2026 earnings per share (EPS) of $4.60, ahead of the Zacks Consensus Estimate of $4.45. TSMC's net profit climbed 68.7% year over year, marking its sixth consecutive quarter of record earnings, per CNBC. Its operating margin reached 58.7%, surpassing the upper end of the company's guidance range of 58%. The strong margin performance highlights TSMC's pricing power amid surging demand for advanced semiconductors. TSMC expects fourth-quarter revenues of $52.3 billion to $54.3 billion. At the midpoint, the forecast implies a 14% sequential increase and a 58% jump from the year-ago quarter, according to the company's earnings call. The forecast beats the Zacks Consensus Estimate of $48.78 billion. The chipmaker also expects capital expenditure during 2026-2028 to be significantly higher than in the preceding three years as it expands capacity to meet rising customer demand. The company expects fourth-quarter growth to be supported by continued demand for its advanced manufacturing technologies, including the ramp-up of its 2-nanometer process. Advanced technologies, defined as 7-nanometer and more advanced processes, accounted for 79% of TSMC's total wafer revenue in the third quarter. Among individual process technologies, 3-nanometer chips generated the largest share of revenue at 33%, followed by 5-nanometer and 7-nanometer chips. High-performance computing was TSMC's largest revenue-generating platform, contributing 68% of total revenue. TSMC said demand for AI chips remains strong, thanks to the expanding adoption of agentic AI and open-source AI models. These developments could broaden AI adoption and increase demand for advanced semiconductors. The company also highlighted growing demand for AI accelerators, processors used in agentic AI applications and networking. It expects semiconductors to play an increasingly important role in the global AI supply chain. TSMC's free cash flow rose sharply to NT$476.56 billion in the third quarter, compared with NT$139.38 billion a year earlier, reflecting a substantial improvement in cash generation. On the manufacturing front, the company said it had completed construction of its second fabrication plant in Arizona and was installing equipment. Mass production is expected to begin in the third quarter of 2027, slightly ahead of the previous schedule. TSMC's board also approved a cash dividend of NT$7 per share for the second quarter. Overall, TSMC's record profitability, robust revenue outlook and plans for increased capital expenditure underscore its confidence in the long-term growth of AI-related semiconductor demand. Apart from the TSMC stock itself, investors can play it in ETF form. The TSMC-heavy ETFs include SP Funds S&P World (ex-US) ETF SPWO (TSMC's weight 20%), Janus Henderson Global Artificial Intelligence ETF JHAI (about 15% exposure) and Matthews Asia Dividend Active ETF ADVE (about 14% focus). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report SP Funds S&P World (ex-US) ETF (SPWO): ETF Research Reports This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Taiwan Semiconductor Manufacturing Corporation (NYSE:TSM) is one of the biggest companies in the world today and a linchpin in the global economy. It's also a bellwether for the semiconductor sector, as the world's biggest chip manufacturer with a differentiated model as a pure-play contract manufacturer. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » On Thursday, TSMC reported third-quarter earnings during a testy moment for the AI trade. AI stocks have tumbled this week amid concerns about rising interest rates, circular financing deals, and competition from China, among other concerns. The VanEck Semiconductor ETF was down 8.2% through the week as of Thursday afternoon, and neocloud stocks, arguably the riskiest group in the AI sector, have gotten hit especially hard. CoreWeave was down 17.6% at the same time on concerns about rising bond yields, and peers like Nebius, IREN, and Oracle had fallen for similar reasons. TSMC stepped up and delivered strong third-quarter earnings on Thursday morning, but it wasn't enough to stanch the bleeding in the AI sector. Image source: Taiwan Semiconductor Manufacturing. Taiwan Semiconductor delivered a round of strong results with revenue up 50.9% to $46.7 billion, well ahead of the consensus at $45.7 billion. Margins also expanded significantly, showing the company flexing its pricing power. Gross margin rose from 59.5% to 66.4%, and operating margin increased from 50.6% to 58.7%. On the bottom line, adjusted earnings per share jumped from $2.92 to $4.60, topping estimates at $4.46. For the first time, 3nm chips made up its biggest source of revenue, driving 33% of sales, and advanced technologies, which the company considers to be 7nm chips and below, accounted for 79% of its revenue. High-performance computing (HPC), which is mostly AI, continues to gain share, making 68% of its revenue. Management noted that demand for AI accelerators was driving HPC revenue. CEO C.C. Wei said that the agentic AI market was beginning to drive AI-related demand, and sounded overwhelmingly positive on it, noting, "The AI market continues to be very strong. Recent developments are very positive to AI's long-term demand outlook. We observe increasing AI demand fueled by the rising adoption of agentic AI as we transition from chatbot to AI assistance." TSMC was trading down 2.2% as of Thursday afternoon, and was down more than 5% at one point. Following the sell-off earlier in the week, investors seem to be adopting a skeptical position toward AI stocks, and even a strong earnings report from a bellwether like TSMC isn't enough to overcome that. What also seemed to weigh on the stock was C.C. Wei's warning that "consumer and price-sensitive end market segments are being challenged due to the impact of rising component prices and macroeconomic uncertainties." Wei seems to be referring to the surge in memory prices, as well as weakness in smartphone and PC demand, which seem to be related to higher costs, persistent inflation, and discretionary spending weakness. However, the AI market is insulated from those headwinds, and Wei called demand for AI chips "extremely robust." The sell-off in TSMC stock also seems to reflect some investor fatigue with the AI trade as investors rotate into market laggards and other sectors, but TSMC stands out from other AI stocks. While AI demand is clearly supporting its growth, the company's wide economic moat as the dominant third-party manufacturer supports its long-term growth and pricing power, and chip demand is likely to continue to grow as new products like robotics come on the market. Currently, the stock trades at a price-to-earnings ratio of just 32, which is only modestly more expensive than the S&P 500, and its strong growth rate seems likely to persist at least through the rest of the decade, given the plans of customers like Nvidia, AMD, and Broadcom. The stock's sell-off today might be discouraging, but it shouldn't dissuade long-term investors from owning the stock. TSMC remains a buy and is a must-own stock for AI investors. Before you buy stock in Taiwan Semiconductor Manufacturing, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $380,579!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,359,789!* Now, it's worth noting Stock Advisor's total average return is 931% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 15, 2026. Jeremy Bowman has positions in Advanced Micro Devices, Broadcom, CoreWeave, Nvidia, Taiwan Semiconductor Manufacturing, and VanEck ETF Trust - VanEck Semiconductor ETF. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Nvidia, Oracle, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy. TSMC Just Posted Record Profit for the Sixth Straight Quarter. Why Did the Stock Fall? was originally published by The Motley Fool

Taiwan Semiconductor Manufacturing Company Ltd. TSM, or TSMC, reported third-quarter 2026 earnings of $4.60 per ADR unit, which increased 68.7% year over year. The bottom line surpassed the Zacks Consensus Estimate of 3.4%. Revenues rose 41.2% year over year to $46.72 billion and beat the Zacks Consensus Estimate by 2.4%. Results reflected strong revenue growth, with advanced process technologies accounting for 79% of total wafer revenues. TSMC's revenues increased 16.2% sequentially in U.S. dollar terms, reflecting stronger momentum compared with the preceding quarter. In Taiwan dollar terms, revenues jumped 17.6% quarter over quarter. The top-line performance exceeded management's previous guidance range of $44.6 billion-$45.8 billion. The results also surpassed the roughly 12% sequential growth implied by the midpoint of the earlier guidance. The 3-nanometer process accounted for 33% of total wafer revenues in the third quarter, increasing from 30% in the preceding quarter. Meanwhile, the 5-nanometer process contributed 28%, declining from 33% in the second quarter. Taiwan Semiconductor Manufacturing Company Ltd. price-consensus-eps-surprise-chart | Taiwan Semiconductor Manufacturing Company Ltd. Quote The 7-nanometer process represented 10% of wafer revenues compared with 11% in the previous quarter. These contributions demonstrate the evolving distribution of wafer revenues across Taiwan Semiconductor's established advanced manufacturing technologies. The 2-nanometer process accounted for 8% of total wafer revenues, up from 3% in the second quarter. This five-percentage-point sequential increase marked a significant shift in the contribution from the company's newest manufacturing technology. Advanced technologies, defined as processes of 7 nanometers and below, remained the dominant component of wafer revenues. The increasing contribution from 2-nanometer manufacturing reflects the ongoing transition toward newer semiconductor production processes. TSMC's gross margin was 66.4%, which expanded 690 basis points (bps) from the year-ago quarter but contracted 130 bps sequentially. The sequential decline coincided with the ongoing ramp-up of the company's 2-nanometer manufacturing technology. Operating margin of 58.7% expanded 810 bps year over year but contracted 160 bps sequentially. TSM's net profit margin was 51.1%, which expanded 540 bps year over year but declined 450 bps sequentially. As of Sept. 30, 2026, Taiwan Semiconductor's cash and marketable securities totaled NT$4 trillion or $126 billion in U.S. dollar terms. Its cash balance increased NT$488 billion sequentially to NT$3.6 trillion. The company generated approximately NT$920 billion in cash from operations and incurred capital expenditures of NT$443 billion or $13.8 billion. TSMC also distributed NT$156 billion in cash dividends during the third quarter. Management now expects full-year 2026 revenues to increase approximately 44% year over year in U.S. dollar terms. The outlook reflects continued robust demand for leading-edge technologies, supported by the company's strong technology differentiation and broad customer base. The Zacks Consensus Estimate is pegged at $168.19 billion. For the fourth quarter of 2026, revenues are expected in the range of $52.3-$54.3 billion. The midpoint implies sequential growth of roughly 14% and year-over-year growth of 58%, based on an exchange rate assumption of NT$31.8 per U.S. dollar. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $48.78 billion. Gross margin is projected between 65% and 67%, while operating margin is expected in the 56.5-58.5% range. TSMC delivered solid third-quarter results, with both earnings and revenues surpassing estimates. The performance was marked by robust year-over-year revenue growth and an increasing contribution from advanced process technologies. The 2-nanometer process gained traction, while 3-nanometer technology remained the largest contributor to wafer revenues, highlighting the company's evolving technology mix. However, sequential contractions in gross, operating and net profit margins warrant attention. Currently, TSMC carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the broader Computer and Technology sector are Micron Technology MU, Richardson Electronics, Ltd. RELL and Ciena CIEN. Micron Technology, sporting a Zacks Rank #1 (Strong Buy), reported a fourth-quarter fiscal 2026 EPS of $33.42, which beat the Zacks Consensus Estimate by 5.73%. Revenues of $54.23 billion surpassed the Zacks Consensus Estimate by 6.33%. You can see the complete list of today's Zacks #1 Rank stocks here. MU has an earnings yield of 18.7% compared with the industry's 4.5% yield. The company surpassed earnings estimates in each of the trailing four quarters, the average surprise being 21%. Richardson Electronics, sporting a Zacks Rank #1, posted a first-quarter fiscal 2027 EPS of 27 cents, exceeding the Zacks Consensus Estimate by 200%. Revenues of $64.92 million beat the Zacks Consensus Estimate by 10.07%. RELL has an estimated fiscal 2027 earnings growth rate of 62.5% compared with the industry's 46.2% growth. The company's earnings outpaced estimates in each of the trailing four quarters, the average surprise being 110%. Ciena, sporting a Zacks Rank #1, reported third-quarter fiscal 2026 EPS of $2.11, which topped the Zacks Consensus Estimate by 21.26%. Revenues of $1.67 billion surpassed the consensus mark by 1.44%. CIEN has an estimated fiscal 2026 earnings growth rate of 171.2% compared with the industry's 35.3% growth. The company's earnings beat estimates in each of the trailing four quarters and matched on one occasion, the average surprise being 17.55%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report Ciena Corporation (CIEN) : Free Stock Analysis Report Micron Technology, Inc. (MU) : Free Stock Analysis Report Richardson Electronics, Ltd. (RELL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research