TSMC Posts Record Q3 Profit, Up 69%, as AI Demand Outpaces Supply
2 min readTSMC record profit is the one bright spot in a brutal week for AI stocks. The world’s largest contract chipmaker reported third quarter net income of NT$763.06 billion on Thursday, up 68.7% from a year earlier and its sixth straight quarter of record profit. CEO C.C. Wei called AI demand extremely robust and said the company sees no sign of growth slowing.
The numbers
Revenue came in at NT$1.494 trillion, up 50.9% year over year and 17.6% from the second quarter. In US dollar terms that is $46.72 billion, above the $44.6 billion to $45.8 billion range TSMC guided to in July, according to Seoul Economic Daily. Net profit beat the LSEG analyst consensus of NT$746.3 billion, and earnings per share rose to NT$29.43 from NT$17.44.
High performance computing, the segment that holds AI accelerators, made up 68% of revenue, up from 57% a year ago. The 2 nanometer process accounted for 8% of wafer revenue as volume production ramps, up from 3% in Q2, while 3nm contributed 33%. Nodes at 7nm and below now make up 79% of the business.
Margins and the road ahead
Gross margin was 66.4%, up almost 7 points from a year ago but down from 67.7% in the second quarter. TSMC attributed the dip to the cost of ramping 2nm. For the fourth quarter the company guided revenue to between $52.3 billion and $54.3 billion, roughly 58% growth at the midpoint, and it now expects full year 2026 revenue to grow about 44% in dollar terms, per Coinpaper. Capital spending stays at $60 billion to $64 billion for the year, with US commitments totaling $265 billion centered on Arizona.
Why it matters
TSMC fabricates the accelerators for Nvidia, AMD, Google, Amazon and most of the custom silicon programs in the industry, so its order book is the closest thing to a real time read on AI capital spending. A 58% growth forecast for the holiday quarter says the hyperscalers have not pulled back, whatever the stock market is pricing in.
The market did not care on the day. TSMC shares closed about 2% lower in Taipei as the Kospi fell 7.9% and the Nikkei dropped 5% on US inflation and AI funding fears. That gap between fundamentals and prices is now the central tension in the AI trade. Watch 2nm wafer share and the Q4 margin print in January to see whether the ramp costs ease as fast as TSMC expects.