TSM Q3 2026 Earnings Review
Taiwan Semiconductor Manufacturing Co (TSMC) surpassed third-quarter projections and forecasted current-quarter results to beat analyst expectations, sending shares lower in early Thursday trade. The world's biggest contract chipmaker reported earnings of $4.60 per U.S. share on $46.72 billion in sales for the September quarter, beating FactSet estimates of $4.46 per share and $45.67 billion in revenue by a wide margin. Earnings were up 61% year-over-year, and sales were up 44%.
Key Takeaways:
TSMC beat third-quarter estimates with a record profit. Net income rose 69% to T$763.1 billion, a sixth straight quarterly record and 11th consecutive quarter of record profits. Revenue jumped 51% in local currency.
The company projected a stronger than expected fourth quarter. TSMC said revenue would come in at $52.3 billion to $54.3 billion, well above analysts’ consensus estimate of $50.22 billion.
Demand for AI chips remains incredibly robust. TSMC said demand for its foundry capacity far exceeds supply and cited ongoing strength in AI processors, advanced CoWoS packaging, networking chips and next generation agentic AI chips. It also raised its 2026 revenue growth forecast to approximately 44%.
TSMC is bracing for a cooling in 2027 and margins are coming off. The company cited macroeconomic headwinds and a cooling in consumer and price sensitive markets in its conservative outlook for 2027. Gross margin for the quarter was 66.4% compared to 67.7% in the previous quarter, and its fourth-quarter guidance implies a 66% midpoint.
Shares tumbled in a broader semiconductor sector sell-off. TSMC’s shares fell ahead of the earnings report as the Philadelphia Semiconductor Index dropped for six straight sessions, down 11.6% since October 6. TSMC also held its 2026 capital spending guidance at $60 billion to $64 billion.
TSMC (TSM) said fourth-quarter revenue will be $52.3 billion to $54.3 billion, compared to the $53.3 billion midpoint exceeding analysts’ $50.22 billion consensus. That would be a significant jump from the $33.14 billion it recorded in the same period last year. The outlook for 2026 revenue growth was raised to around 44% as demand for chips related to AI remained robust and well above its capacity.
Meanwhile, the gross margin came in at 66.4% in the third quarter, compared to 67.7% in the previous one, and a forecast for a range of 65% to 67% in the fourth quarter. The 2026 capital-spending budget of $60 billion to $64 billion was maintained. Although there has been no sign of a cooling in the AI trend, TSMC expects to enter 2027 more conservatively than last year due to macroeconomic concerns and a challenging environment for consumer and value-sensitive markets, according to the company’s chairman C.C. Wei.
The results come as tech stocks face a widespread sell-off, with the Philadelphia Semiconductor index plunging for six days in a row on Wednesday and down 11.6% from its October 6 close. TSMC’s shares dropped 2% in advance of the results, with Samsung and SK Hynix’s also significantly lower on fears that higher interest rates and the slowdown in AI investment will hurt the sector. The company’s net income was T$763.1 billion in the third quarter, compared to T$451.3 billion a year earlier, beating analysts’ estimates, and representing six straight quarters of record earnings.
Analysts Expectation
An analyst from Stifel maintained Taiwan Semiconductor ADR (TSM) at ’buy’ with a price target of $520.00 from a prior price target of $515.00.
Needham analysts raised the price target on Taiwan Semi (TSM) to $560.00 (from $530.00) while maintaining a Buy rating.
SHARIAH Compliance Metrics
TSM qualifies all three Musaffa Shariah screening parameters based on AAOIFI methodology as of October 2026.
Business Activity 97.35% Halal, Doubtful is 0.00%, and non-Halal is 2.65%.
Interest-bearing securities and assets = 12.40% (Shariah-complaint is < 30%).
Interest-bearing debt = 3.27% (Shariah-complaint is < 30%).
You can get a more detailed breakdown of TSM Shariah status on its stock page.