TLDR
- Taiwan Semiconductor reported Q3 net profit of $13.55 billion, a 28% year-over-year increase and seventh consecutive quarter of growth
- Revenue climbed 30% as AI infrastructure demand from Nvidia, Apple, and AMD continues to accelerate
- Wall Street analysts raised price targets to $400 with Strong Buy ratings ahead of Thursday’s earnings call
- TSM stock dropped 8% last week on tariff concerns but remains up 30% year-to-date on AI momentum
Taiwan Semiconductor Manufacturing Company delivered another blockbuster quarter. The world’s largest contract chipmaker posted Q3 net profit of $13.55 billion, representing a 28% jump from the same period last year.
This marks TSMC’s highest-ever quarterly net income. It’s also the seventh consecutive quarter the company has grown its profits.
The numbers underscore one simple fact: AI chips are in massive demand. Tech giants like Nvidia, Apple, and AMD all depend on TSMC’s advanced manufacturing capabilities. There’s simply no other chipmaker that can produce at this scale and quality.
Revenue tells the same story. TSMC’s third-quarter sales increased 30% year-over-year, surpassing market expectations. September revenue alone jumped 31.4% compared to last year, though it dipped 1.4% from August.
Wall Street Raises the Bar
Analysts are feeling confident about TSMC’s future. Susquehanna’s Mehdi Hosseini lifted his price target from $300 to $400 last week. He maintains a Buy rating and expects the company to beat expectations again.
Barclays analyst Simon Coles also increased his target from $325 to $330. The consensus view on Wall Street gives TSM stock a Strong Buy rating based on nine Buy recommendations and one Hold.
Wall Street expects Q3 earnings per share of $2.63, up more than 34% from last year. Revenue projections sit at $32.07 billion, falling within TSMC’s guidance range of $31.8 billion to $33.0 billion.
IDC’s Mario Morales predicts TSMC will grow revenue 30% to 35% this year. He notes that leading chip suppliers have only one place to go for advanced manufacturing.
Tariff Talks and Arizona Expansion
TSM stock climbed almost 5% in pre-market trading Monday but has fallen 8% over the past five sessions. Trump’s threat of 100% tariffs on China rattled markets last week.
Currently, Taiwan’s exports to the US face a 20% tariff, but chips are exempt. US Commerce Secretary Howard Lutnick suggested last month that Taiwanese companies split production 50-50 between Taiwan and America.
Taiwan rejected that proposal. TSMC is already investing $165 billion to build factories in Arizona, maintaining its commitment to US expansion.
Despite recent volatility, TSM stock has gained 30% this year. The company’s $1.22 trillion market cap makes it Asia’s most valuable listed firm, nearly triple Samsung Electronics’ valuation.
TSMC expects gross profit margin between 55.5% and 57.5% for Q3, slightly below last quarter’s 58.6%. The company will provide Q4 guidance during Thursday’s earnings call at 0600 GMT.
Cloud service providers continue competing for access to TSMC’s manufacturing capacity. AI infrastructure remains a strategic priority for tech companies despite trade policy uncertainty.
