$TSM has been rewriting records for six straight quarters! Yet the stock is shedding over 2%.📉
Taiwanese chipmaker reported net profit of TWD 763.1 billion for the third quarter, roughly USD 23.6 billion, representing a year-over-year increase of 69%. Analysts had expected TWD 746.3 billion.
- Revenue hit a record USD 46.7 billion, up 50% year-over-year, exceeding even the upper end of the company's own guidance.
- Gross margin was 66.4% and operating margin 58.7%, landing above the top of the guidance range. The market had feared the ramp of 2nm production and costlier overseas fab operations would put more significant pressure on profitability.
7nm and more advanced technologies (5nm and 2nm) account for 79% of wafer revenue, showing how strongly the business is tied to demand for the highest-performance AI chips. These are mainly required by $NVDA and $AAPL.
Fourth-quarter guidance calls for revenue of USD 52.3 to 54.3 billion, i.e., roughly 14% quarter-over-quarter growth at the midpoint of the range.
The company left its 2026 capital expenditure (CapEx) guidance unchanged at USD 60 to 64 billion.
From the earnings call: TSMC can absorb costs of new manufacturing processes without significant margin erosion. However, according to management, risks include high expectations already baked into the stock price and dependence on whether the largest technology companies maintain their current pace of AI infrastructure investment.