Taiwan Semiconductor Manufacturing (TSM) Earnings Date & Reports

Key Takeaways

• Third-quarter revenue reached NT$1,494.24 billion (US$46.72 billion), up 50.9% year over year and 17.6% sequentially, exceeding the company's own guidance.
• Diluted earnings per share (EPS) came in at NT$29.43, or US$4.60 per ADR (American Depositary Receipt), up 68.7% year over year and ahead of consensus estimates.
• Gross margin of 66.4% expanded sharply year over year but slipped 130 basis points (bps) sequentially on the initial ramp of 2-nanometer technology.
• Advanced technologies (7-nanometer and below) accounted for 79% of wafer revenue, while HPC (high-performance computing) climbed to 68% of revenue on strong AI demand.
• Management guided fourth-quarter revenue to US$52.3–54.3 billion and reiterated full-year 2026 revenue growth of roughly 44% in U.S. dollar terms.

Earnings Context and Why It Matters

Taiwan Semiconductor Manufacturing's quarterly results are widely viewed as a bellwether for the global semiconductor industry and, increasingly, for the broader AI trade. As the world's largest contract chipmaker, TSMC manufactures processors for leading fabless companies across smartphones, data centers, and automotive applications. With AI-related demand driving an extraordinary expansion in leading-edge capacity, investors look to this report for signals on chip demand, pricing power, and the health of the supply chain. A beat or miss here often moves sentiment across the entire technology sector, making the company's guidance and margin commentary just as closely watched as its headline revenue and EPS figures.

Reported Results

TSMC reported third-quarter 2026 revenue of NT$1,494.24 billion (US$46.72 billion), an increase of 50.9% from a year earlier and 17.6% from the prior quarter. In U.S. dollar terms, revenue rose 41.2% year over year and 16.2% sequentially, coming in above management's guidance range of US$44.6–45.8 billion and ahead of consensus estimates near US$45.67 billion.

Net income was NT$763.06 billion, up 68.7% year over year, while diluted EPS reached NT$29.43 (US$4.60 per ADR), also up 68.7%. The result exceeded the FactSet consensus of roughly US$4.46 per ADR and the LSEG SmartEstimate for net income of about NT$746.3 billion.

Gross margin was 66.4%, up 690 bps year over year but down 130 bps sequentially, reflecting margin dilution from the steep initial ramp of 2-nanometer production. Operating margin was 58.7%, and net profit margin was 51.1%. By technology, 2-nanometer contributed 8% of wafer revenue (up from 3% in the prior quarter), 3-nanometer 33%, 5-nanometer 28%, and 7-nanometer 10%. HPC rose 22% sequentially to represent 68% of total revenue.

For the fourth quarter, TSMC guided revenue to US$52.3–54.3 billion, implying roughly 14% sequential and 58% year-over-year growth at the midpoint, with gross margin of 65–67% and operating margin of 56.5–58.5%. Management reiterated full-year 2026 revenue growth of approximately 44% and a 2026 capital expenditure budget of US$60–64 billion.

AI Screener

Tickeron's AI Screener is an AI-powered stock and ETF discovery tool that helps traders and investors filter the market based on technical patterns, fundamentals, trends, volatility, and AI-driven signals. Users can scan thousands of stocks and ETFs using customizable filters such as industry, market capitalization, technical indicators, price patterns, and performance metrics. The screener is designed to surface trade ideas, trending stocks, breakout candidates, and market opportunities more efficiently than manual screening, making it a practical companion for investors tracking earnings-driven moves like TSMC's. Explore the AI Screener to refine your own watchlist and identify signals that align with your strategy.

Market Reaction and Investor Sentiment

Despite a headline beat across revenue, EPS, and guidance, TSMC shares declined in the session following the report. The pullback reflected a combination of profit-taking after a strong run and a broader risk-off tone in global equity markets, rather than any fundamental disappointment in the results. Investors appeared particularly focused on the sequential contraction in gross margin and management's acknowledgment that margin dilution will widen in the coming years, even as revenue growth accelerates. The reaction underscores how elevated expectations for AI-linked semiconductor names can outweigh strong reported numbers, with sentiment sensitive to any incremental pressure on profitability even when demand remains robust.

Forward Outlook and Key Factors to Monitor

The clearest near-term catalyst is TSMC's fourth-quarter guidance, which points to another record quarter driven by continued AI-related demand for leading-edge nodes. Management said AI demand remains "extremely robust" with no signs of a slowdown, and full-year 2026 revenue is now expected to grow about 44% in U.S. dollar terms.

Margin dynamics will be a central theme to monitor. The steep ramp of 2-nanometer technology is expected to keep diluting gross margin, with fourth-quarter gross margin guided down to 66% at the midpoint. Overseas fabrication facilities, or fabs, are also expected to dilute margins by about 2% for 2026, widening to 3–4% over the next few years as new sites scale up.

Investors should also track the capital expenditure trajectory. TSMC reiterated its 2026 budget of US$60–64 billion and signaled that spending from 2026 through 2028 will be significantly higher than the prior three years to support customer growth. The company's advanced packaging roadmap and the progress of its next-generation A14 technology, with risk production targeted for 2027, will be additional indicators of its competitive position and long-term AI-driven demand.

Disclaimer

The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.

Disclaimers and Limitations