TLDR
- TSMC reported a 28% jump in Q3 profit to a record $13.55 billion, marking its seventh consecutive quarter of profit growth
- The company’s revenue increased 30% year-over-year, driven by insatiable demand for AI infrastructure from customers like Nvidia and Apple
- Analysts raised price targets to $400, with Wall Street expecting Q3 earnings per share of $2.63, up 34% from last year
- TSM stock gained 30% this year but fell 8% in the past five days following Trump’s 100% tariff threat on China
- TSMC is investing $165 billion in Arizona factories while Taiwan rejects US proposals to split chip production 50-50
TSMC just posted numbers that show why it’s the undisputed king of AI chipmaking. The world’s largest contract chip manufacturer reported a net profit of $13.55 billion for the third quarter. That’s a 28% increase from the same period last year.
The Taiwan-based company supplies chips to every major player in the AI game. Nvidia and Apple both rely on TSMC’s advanced manufacturing capabilities. AMD is in the same boat.
Revenue growth tells an even more interesting story. TSMC’s third-quarter revenue jumped 30% year-over-year, beating market forecasts. September sales alone increased 31.4% compared to last year.
This marks the seventh straight quarter of profit growth for the company. Any result above $12.2 billion would have been a record. TSMC cleared that bar easily.
The stock market noticed. TSM shares climbed almost 5% in pre-market trading on Monday. The stock has gained 30% so far this year.
Analysts See More Upside
Wall Street analysts are getting more bullish. Susquehanna analyst Mehdi Hosseini raised his price target from $300 to $400 last week. He expects TSMC to deliver a “beat and raise” quarter.
Barclays analyst Simon Coles also bumped up his target. He moved from $325 to $330 ahead of the earnings report. The consensus rating on TSM stock stands at Strong Buy based on nine Buy ratings and one Hold.
Analysts expect fourth-quarter and first-quarter 2026 results to track ahead of both consensus estimates and seasonal trends. Wall Street projects Q3 earnings per share of $2.63, up more than 34% year-over-year.
IDC research firm group vice president Mario Morales predicts TSMC’s revenue will grow 30% to 35% this year. He points to exponential growth in AI infrastructure investments as the main driver.
Trade Policy Creates Questions
The tariff situation remains murky. Taiwan’s exports to the United States currently face a 20% tariff. However, chips are exempt from that levy.
US Commerce Secretary Howard Lutnick proposed last month that Taiwanese companies split chip production 50-50 between Taiwan and the United States. Taiwan rejected that idea.
TSMC is already investing $165 billion to build factories in Arizona. The company maintains that production will remain concentrated in Taiwan for now.
TSM stock dropped over 8% in the past five trading days. Trump’s threat to impose 100% tariffs on China spooked investors. But AI-related spending shows no signs of slowing down.
TSMC has a market capitalization of around $1.22 trillion. That’s nearly three times the value of South Korean rival Samsung Electronics. The company is Asia’s most valuable listed firm.
The chipmaker’s performance has powered Taiwan’s benchmark stock index to a 16.9% gain this year. Cloud service providers and tech companies continue to compete for access to TSMC’s manufacturing capacity.
TSMC’s gross profit margin is expected to land between 55.5% and 57.5% for the quarter. That’s slightly lower than the 58.6% recorded in the previous quarter.
The company will provide fourth-quarter guidance during its earnings call scheduled for Thursday at 0600 GMT. Monthly revenue data for July through September already exceeded Wall Street expectations.
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