Kyle Reidhead
CEO & Analyst of Milk Road/Milk Road AI
TSMC's record quarter shows chip demand is accelerating, not peaking. Q3 revenue was about $46.7 billion (NT$1.49 trillion), up 51% year over year and above both the top of TSMC's guidance and Street estimates of NT$1.46 trillion. Quarterly revenue is up about 2.4x in three years. Despite bubble fears, the AI buildout still looks early and TSMC can go much higher than people realize. x.comÂ
Goldman Sachs raised its TSMC price target to $660 as agentic AI drives CPU demand alongside GPUs and networking, forcing TSMC to build for training, inference and agents at once. Goldman lifted its 2027 and 2028 capex forecasts to $85B and $98B. AI chips are among the few areas where earnings grow far faster than the 5.3% 10-year yield; TSMC's largest customers reportedly raised 2nm orders 10-20%, and it is lining up price hikes of up to 10% for 2027. x.comÂ
TSMC's growth looks compelling against its valuation. Diluted GAAP EPS rose about 70% year over year and US-dollar revenue 41%; at roughly 22 times annualized earnings, guidance implies accelerating growth. TSMC expects continued demand for leading-edge processes, including its 2-nanometer ramp. x.comÂ
TSMC's AI-chip foundry role is translating into another record quarter of profit. Third-quarter revenue reached NT$1.49 trillion, up 51% year over year, and net income NT$763 billion, up 69%, its sixth straight record-profit quarter; the attached results show a 51.1% net margin and a 2.2% beat against the cited consensus. This strengthens the existing bullish view that AI chip demand runs through TSMC. x.com x.comÂ
TSMC may lose pricing power as performance gains shift from shrinking transistors to stacking, interconnects and optics, while logic folding could make older processes competitive. Despite strong leading-edge demand, investors may overestimate the profit share its node leadership can retain. Its cautious expansion and past reluctance toward advanced packaging suggest a risk-averse culture that protects returns but could leave it late to disruptive technologies and key customers. x.comÂ
TSMC's latest results point to AI chip demand still running ahead of supply, supporting the semiconductor and equipment trade. Cantor says TSMC raised its 2026 revenue outlook again, guided December-quarter sales above consensus and held 65-67% gross-margin guidance through the N2 ramp; its bullish sector read names Nvidia, Broadcom, AMD, ASML, Applied Materials, Lam Research and KLA. Jensen Huang says AI labs need not reach trillions in revenue to justify the buildout. x.com x.comÂ
TSMC keeps delivering massive growth at a $1.9T market cap. Its latest quarter showed revenue up 41%, net income up 58% and 66% margins. x.comÂ
TSMC's shifting cost structure is pressuring gross margin despite revenue and EPS beats. TSMC reported Q3 gross margin of 66.4%, down from 67.7% in Q2, and another decline is guided next quarter; Arizona is expected to drag gross margin by 2-4%. TSMC is checking AI data-center progress as it plans wafer capacity, while reiterating long-term AI demand strength. Price hikes may be next, given management's commitment to protect shareholder interests. x.com x.comÂ
TSMC's capacity-constrained growth is holding margins through its costly 2nm ramp. Its Q4 revenue guide of $52.3-54.3B beats $49B consensus, implying 14% sequential growth, with 65-67% gross-margin guidance; planned Q4 capex is $19-23B versus $13.8B last quarter. World Trade Securities maintains Overweight and a $620 target. TSMC is also in talks to run Elon Musk's proposed Texas Terafab; additional fab and equipment demand depends on a deal. x.com x.comÂ
TSMC's strong AI demand is straining supply, while solid company fundamentals and attractive semiconductor valuations make an abrupt stop to its advance unlikely. TSMC's Wendell Huang expects 2026-28 capex to be significantly higher than in the previous three years to support customer growth; he says most capex is tied to long-term demand. x.comÂ
TSMC looks like it has put in a blowoff top, rising even on an announcement that it cannot afford new ASML equipment. x.comÂ
TSMC's earnings set the stage for a strong reporting season. Hold the line on TSMC despite its shares being caught in SOXX's algorithmic sell-off; StockMKTNewz reported that TSMC beat quarterly revenue and EPS estimates. x.comÂ
