Key Stats for $TSM Stock
- Price Change for $TSM stock: -2%
- Current Share Price: $300
- 52-Week High: $311
- $TSM Stock Price Target: $313
What Happened?
Taiwan Semiconductor Manufacturing (TSM) stock fell on Thursday after it reported blowout third-quarter results that crushed Wall Street expectations.
The world’s largest contract chipmaker posted net income of NT$452.3 billion ($15.2 billion), beating estimates of NT$407.05 billion and marking a fresh record high. Revenue hit NT$989.92 billion ($33.10 billion), also surpassing the NT$967.15 billion consensus.
Net income jumped 39.1% year-over-year and 13.6% from the previous quarter, which had itself set a record.
Revenue climbed 30.3% from the same period last year as its high-performance computing division, which includes AI accelerators and 5G applications, drove results by accounting for 57% of total revenue.
CEO C.C. Wei made clear during the earnings call that AI demand continues accelerating beyond TSMC’s bullish expectations.
“Recent developments in AI market continue to be very positive,” Wei said. He explained that growing consumer adoption of AI models is creating exponential increases in computing requirements, which translates directly into stronger semiconductor demand.
“Thus, our conviction in the AI megatrend is strengthening,” he added.
TSMC raised its full-year 2025 revenue growth forecast to the mid-30% range from the 30% guidance provided in July.
The company also increased its capital expenditure floor to $40 billion from $38 billion to support capacity expansion and technology upgrades.
Wei noted that AI demand is so strong that TSMC is “working very hard to narrow the gap” between supply and capacity.
Chips at 7-nanometer or smaller process nodes accounted for 74% of TSMC’s wafer revenue in the quarter. Within that, 3-nanometer chips contributed 23% of revenue while 5-nanometer chips accounted for 37%.
Smaller nanometer measurements indicate more compact transistor designs, which deliver greater processing power and efficiency. These cutting-edge nodes are critical for AI applications from customers like Nvidia and AMD.
Wei also addressed tariff uncertainties, acknowledging risks in consumer electronics and price-sensitive market segments as Taiwan negotiates with Washington.
However, TSMC’s massive investments in U.S. manufacturing facilities should provide some insulation. The company is expanding aggressively in Arizona and expects to receive exemptions on specific tariff policies given its strategic importance.
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What the Market Is Telling Us About TSM Stock
AI chip demand shows no signs of slowing despite concerns about overcapacity or weakening end markets.
TSMC confirmed that every major player building AI infrastructure needs more advanced chips than suppliers can currently deliver. Wei’s comments about “narrowing the gap” between supply and demand suggest pricing power remains intact.
The revenue guidance raise to mid-30% growth is significant given TSMC’s scale. Growing revenue by more than 30% when you’re already generating over $80 billion annually requires massive end-market expansion.
The company’s willingness to raise capex despite already planning for $40 billion in spending signals management sees durable multi-year demand rather than a short-term spike.
The 74% revenue contribution from 7-nanometer and below demonstrates the chip maker’s competitive moat.
Competitors like Samsung and Intel continue to struggle to match TSMC’s yields and performance at leading-edge nodes. This technical advantage positions TSMC to capture the highest-margin opportunities as AI workloads demand the most advanced chips.
While TSMC expects exemptions, any broad semiconductor tariffs could disrupt supply chains and customer demand.
Second, the company acknowledged monitoring for potential prebuilding in consumer electronics, though inventory levels currently appear healthy.
Third, while AI demand is booming, questions persist about whether this level of infrastructure spending is sustainable beyond 2026.
The 38% year-to-date gain in TSM stock reflects these dynamics. The valuation has expanded as earnings estimates have risen, but the stock isn’t dramatically expensive relative to growth prospects if AI infrastructure spending continues at current rates.
Whether shares can maintain momentum depends largely on whether the mid-40% AI accelerator demand CAGR through 2029 proves conservative or optimistic.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
