TSMC Profit Expected to Jump 65% on AI Chip Boom

At a glance: TSMC's net profit is forecast to rise 65% in the third quarter to NT$746.3 billion, marking its sixth consecutive quarterly record. The company had previously reported revenue of about NT$1.49 trillion, roughly 50% higher than a year earlier. Fourth-quarter revenue guidance, profit margins and […]

TSMC's third-quarter net profit is expected to grow 65 percent to NT$746.3 billion, setting a sixth consecutive quarterly record high.

The company's revenue was previously announced at about 1.49 trillion Taiwan dollars; About 50% more than the previous year.

Fourth quarter earnings guidance, profit margins and the possibility of changes to the company's $60-$64 billion capital budget for 2026 will be the main focus of the reporting call.

Taiwan's semiconductor manufacturing company TSMC is scheduled to release its third-quarter financial results on Thursday. Strong demand for advanced chips for artificial intelligence is expected to push the company's net profit to a sixth consecutive quarterly record high.

TSMC's third-quarter net profit will grow 65 percent to 746.3 billion Taiwan dollars, equivalent to about 23.4 billion U.S. dollars, according to LSEG's Smart Estimate, which is derived from 16 analysts' forecasts and reported by Reuters. In these estimates, more weight is given to analysts who have a history of more accurate forecasting. Any figure above NT$706.56 billion would be a new record for the company's quarterly net profit and mark the 11th consecutive quarter of profit growth.

The financial reporting of the company will be held at 06:00 GMT (9:30 Iran time); The time is equal to 2:00 PM in Taiwan and 2:00 AM in New York. In the report, TSMC is also expected to update its outlook for the fourth quarter and its estimate of full-year performance. The time of this report is 17:00 Eastern Daylight Time.

Third quarter earnings are no longer a surprise factor. Last week, TSMC announced that its revenue for the period grew nearly 50 percent year-on-year to a record close to 1.49 trillion Taiwan dollars, beating market forecasts. Investors are now paying more attention to the company's profit margin, fourth quarter earnings guidance, and capital expenditures.

In July, TSMC raised its 2026 capex forecast to US$60 billion to US$64 billion; While the ceiling of the previous range was 52 to 56 billion dollars. With record revenue already reported and profit growth largely expected, the stock's reaction will likely depend more on the outlook for the fourth quarter and any changes to this cost range than anything else. A further increase in capital spending could be seen as a sign of the company's confidence in continued AI demand through 2027, helping shares of chipmaking equipment companies, including ASML.

Analysts say demand for TSMC's AI chip manufacturing capacity and the company's advanced chip packaging technology, known as CoWoS, remains strong. This technology combines multiple chips into a single package. Nvidia and Apple are important customers of the world's largest manufacturers of advanced artificial intelligence chips.

TSMC's market value is about 2 trillion US dollars, making it the most valuable company in Asia; A value that is almost double that of South Korea's Samsung Electronics. TSMC's results could also be indicative of the state of Nvidia and the broader AI hardware market; So a cautious tone about margins or orders may weigh on tech stocks in Asia and the US. After the stock's impressive run this year, expectations are high for a positive surprise.

TSMC is also expanding its operations outside of Taiwan. The company is investing 265 billion US dollars in Arizona chip factories; A figure that includes an additional $100 billion in investment announced in July. Reuters reported in September that TSMC was considering an investment in Texas. Elon Musk, the CEO of Tesla, said last week that his companies will build a complex to manufacture and launch artificial intelligence chips called Terafab; Part of its capacity may be provided to TSMC.

Any comments about the provision of equipment will also be followed closely. ASML, a major supplier of chip manufacturing equipment to TSMC and its rivals, warned on Wednesday that its planned capacity for 2027 and 2028 will not fully meet customer demand.

TSMC shares, which are traded in Taipei, have grown 63% since the beginning of this year; An increase in line with the 69% growth of Taiwan's benchmark index.