AI chip demand sets TSMC up for sixth straight record quarter

Record revenue has already been published, so Thursday's profit beat is all but priced in, and the shares are likely to move on fourth-quarter guidance and any shift in the US$60 billion-US$64 billion capex range. A higher spending plan would be seen as a bet on AI demand persisting into 2027 and would lift chip-equipment makers such as ASML. TSMC's report is also a bellwether for Nvidia and the wider AI hardware sector, meaning a cautious note on margins or orders could hit tech stocks across Asia and the United States. With the shares already up sharply this year, the hurdle for a positive surprise is set high.

Earlier:

• ASML flags 2027 and 2028 supply shortfall as Q3 sales set a record

TSMC's profit figure is nearly a foregone conclusion; the real test on Thursday is what it says about the current quarter and its spending intentions.

Summary:

• Based on an LSEG SmartEstimate from 16 analysts, Q3 net profit is expected to climb 65% to NT$746.3 billion, roughly US$23.4 billion.
• A print above NT$706.56 billion would be a record and also an 11th consecutive quarter of earnings expansion.
• Revenue for the quarter, already out, reached a record near NT$1.49 trillion, up about 50% on year.
• The call begins at 0600 GMT (2:00am in New York), and fourth-quarter guidance plus an updated full-year view are due.
• The 2026 capex forecast was raised in July to US$60 billion-US$64 billion.
• Arizona investment totals US$265 billion, and a Texas venture is reportedly under consideration.

Taiwan Semiconductor Manufacturing Co (TSMC) is expected to report a sixth straight quarter of record profit on Thursday, as strong spending on AI infrastructure keeps demand for its most advanced chips elevated.

Third-quarter earnings are projected to come in 65% higher at NT$746.3 billion, or about US$23.4 billion, per an LSEG SmartEstimate built from 16 analysts and reported by Reuters. The SmartEstimate model weights analysts with better track records more heavily. A result above NT$706.56 billion would mark the firm's largest quarterly net profit ever and an 11th consecutive quarter of growth.

Management hosts the earnings call at 0600 GMT, which corresponds to 2:00pm in Taiwan and 2:00am in New York. On it, TSMC is expected to offer fourth-quarter guidance and an updated full-year view.

Revenue is where no surprise is expected. TSMC disclosed last week that third-quarter sales advanced about 50% year on year to a record of around NT$1.49 trillion, above market consensus. The market's focus will instead be on margins, Q4 guidance and capex. In July, the 2026 capex forecast was raised from US$52 billion-US$56 billion to US$60 billion-US$64 billion.

Analysts still see demand as strong for TSMC's AI chip capacity and for CoWoS, the advanced packaging technology that places multiple chips in one package. TSMC, the world's largest producer of advanced AI chips, has Nvidia and Apple as top customers. With a market capitalization of about US$2 trillion, it is Asia's most valuable company, roughly twice the value of Samsung Electronics in South Korea.

International expansion is also on the agenda. TSMC is pumping US$265 billion into Arizona chip factories, including an added US$100 billion announced in July. Reuters reported in September that TSMC was weighing a Texas investment. Tesla chief executive Elon Musk said last week his companies would build and run a Terafab AI chip complex, and TSMC could potentially sublease part of it.

Investors will be watching for any statement on equipment supply. ASML, an important supplier of chipmaking gear to TSMC and other manufacturers, warned Wednesday that its planned capacity for 2027 and 2028 will not be enough to meet customer demand in full.

TSMC's Taipei-listed shares have gained 63% year to date, broadly in line with the 69% advance in Taiwan's benchmark index.