TSM: record $23.9B profit and raised 2026 outlook, stock fell anyway

TSMC reported third-quarter results on Thursday that beat on every major line — revenue, profit, and margins — and the stock still fell about 2% to roughly $422 by the closing bell.

– Revenue: $46.72B, up 50.9% YoY — above its own $44.6–45.8B guidance
– Net income: $23.9B, up 68.7% YoY — a sixth straight record quarter
– Diluted EPS: NT$29.43 ($4.60 per ADR) vs ~$4.45 consensus
– Gross margin: 66.4%, inside its 65–67% guidance

The real headline is the outlook. TSMC guided fourth-quarter revenue of $52.3–54.3B, comfortably above the roughly $48.8B consensus — about 58% year-over-year growth at the midpoint. Management also lifted its full-year 2026 revenue growth forecast to around 44% in dollar terms.

The AI mix shift is now decisive. High-performance computing — the bucket holding AI accelerators — reached 68% of revenue, up from 57% a year ago, while smartphones shrank to 21%. CEO C.C. Wei told analysts AI demand still exceeds TSMC’s supply. The newest 2-nanometer node jumped from 3% of wafer revenue in Q2 to 8% in Q3, and advanced nodes (7nm and below) now account for 79%.

So why did the stock fall? Context: chip stocks were already sliding into the report, and the options market had priced a ~4% post-earnings move. A clean beat without a margin surprise wasn’t enough — and management flagged margin pressure ahead from the steep 2nm ramp and higher-cost overseas fabs.

What to watch next: whether AI-related growth beats management’s prior mid-to-high-50% CAGR outlook, and how the massive capex cycle — $60–64B this year, significantly higher through 2028 — shows up in free cash flow.

Related reading: MU: beat-and-raise, $61.5B guide crushes estimates (https://bullounge.com/forums/topic/mu-beat-and-raise-61-5b-guide-crushes-estimates-stock-barely-moves/)

Is TSMC’s selloff on record numbers a buying setup, or a warning that AI-hardware expectations have finally outrun reality?

Sources: https://www.watchlistnews.com/taiwan-semiconductor-manufacturing-nysetsm-issues-quarterly-earnings-results-beats-expectations-by-0-15-eps/11262467.html · https://financialgurkha.com/news/2026-10-15-tsmc-q3-2026-earnings

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