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TSMC Stock Hits Record High After Strong Q3 Earnings
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading contract chipmaker, reported stronger-than-expected earnings for the third quarter and provided upbeat guidance for the fourth quarter. The results reflected robust demand for advanced chip technologies, particularly in the AI and high-performance computing segments.
Q3 Financial Highlights
In the third quarter, TSMC earned $2.92 per U.S. share on revenue of $33.1 billion. These figures significantly outperformed analyst estimates, which had projected earnings of $2.63 per share and revenue of $32.07 billion. Compared to the same period a year ago, when the company reported earnings of $1.95 per share on $23.62 billion in revenue, the results mark substantial year-over-year growth.
In local currency, earnings rose by 39% and revenue grew by 30.3%, underlining TSMC’s strong performance and operational efficiency despite broader macroeconomic uncertainties and global supply chain challenges.
Guidance for Q4 Surpasses Expectations
Looking ahead to the fourth quarter, TSMC expects revenue between $32.2 billion and $33.4 billion. The midpoint of this range—$32.8 billion—exceeds Wall Street’s consensus forecast of $31.55 billion. This would also represent a notable increase from the $26.38 billion in revenue reported for the fourth quarter of the previous year.
Gross margins are projected to be in the range of 59% to 61%, while operating margins are expected to fall between 49% and 51%, further reinforcing the company’s solid profitability outlook.
Stock Reaction and Market Movement
Following the earnings announcement, TSMC’s stock initially surged to an all-time intraday high of 311.37, reflecting positive investor sentiment. However, the stock later pulled back and ended the trading session down 1.6% at 299.84. The stock had previously broken out from a flat base with a buy point of 248.28 earlier in September.
Despite the pullback, TSMC remains on multiple investment and performance watchlists, underlining its ongoing strength in the market and investor interest in its long-term potential.
Technology Leadership and Segment Performance
One of the key drivers of TSMC’s third-quarter success was strong demand for its advanced semiconductor technologies. Shipments of 3-nanometer chips accounted for 23% of total wafer revenue during the quarter, while 5-nanometer chips contributed 37%. In total, advanced technologies—defined as 7-nanometer and smaller nodes—represented 74% of total wafer revenue.
TSMC’s Chief Financial Officer Wendell Huang commented on the performance, stating:
“Our business in the third quarter was supported by strong demand for our leading-edge process technologies.”
Looking ahead, Huang added that the company expects continued strong demand to support business momentum in the fourth quarter, particularly in its most advanced process nodes.
Demand Driven by AI and High-Performance Computing
TSMC has benefited significantly from the global surge in demand for artificial intelligence and data center computing. Much of the recent momentum has come from increased orders for AI chips, particularly from major clients like Nvidia, which rely on TSMC for high-performance chip manufacturing.
In addition to Nvidia, TSMC manufactures chips for major technology players including Apple, AMD, Broadcom, and Qualcomm. These relationships further strengthen TSMC’s position as a critical supplier in the global tech ecosystem.
Analysts have responded positively to the company’s latest results. One analyst highlighted TSMC’s operational discipline, AI-driven growth, and capital efficiency as major strengths, while increasing the stock’s target price due to the company’s consistent execution and favorable industry positioning.
Strategic Considerations and Outlook
While the company continues to post strong results, it faces challenges such as geopolitical tensions, supply chain management, and currency fluctuations. Its global expansion, including investments in semiconductor fabrication facilities outside of Taiwan, introduces new operational complexities and financial risks.
Nonetheless, TSMC’s dominant position in leading-edge manufacturing technologies gives it a strategic advantage. As demand for AI, 5G, and high-performance computing continues to expand, the company is well-positioned to capture future growth opportunities.
