TSMC · NYSE: TSM · TWSE: 2330
TSMC (TSM) Stock Research
TSMC manufactures the chips that power AI servers, smartphones and other electronic systems. For TSM investors, the opportunity is growing demand for advanced manufacturing; the financial test is whether new process nodes and packaging capacity deliver strong margins and cash returns after a substantial investment cycle.
- Latest complete financial period
- Q3 2026
- Quarterly results published
- Oct 15, 2026
- Research reviewed
- Oct 29, 2026
01
Official Q3 2026 results
TSMC earnings and margins
02
Growth and earnings quality
What changed in TSMC’s third quarter?
Q3 2026 revenue reached US$46.72 billion, up 41.2% year over year and 16.2% sequentially. Taiwan-dollar revenue was NT$1,494.24 billion, up 50.9% year over year; currency bases explain the different growth rates.
Gross margin was 66.4% and operating margin 58.7%, up from 59.5% and 50.6% a year earlier. Both declined from Q2’s 67.7% and 60.3%, so annual improvement and sequential pressure coexist.
Diluted EPS was NT$29.43 per Taiwan ordinary share, or US$4.60 per ADR. Net income attributable to parent shareholders was NT$763.06 billion. Non-operating items of NT$34.59 billion were below Q2’s NT$95.83 billion.
2nm, 3nm, 5nm and 7nm supplied 8%, 33%, 28% and 10% of wafer revenue, totaling 79%. HPC supplied 68% of revenue by platform; the broader HPC category is not a separately disclosed AI revenue total.
03
BasisPilot
TSM: advanced manufacturing and investment returns
Advanced-node demand and pricing
The 79% contribution from 7nm and more advanced technologies reflects TSMC’s exposure to high-value manufacturing. The return depends on process competitiveness, useful output and customer willingness to pay for performance—not simply on announcing a smaller node.
2nm ramp and manufacturing yield
2nm supplied 8% of Q3 wafer revenue. Early volume growth can bring substantial ramp costs before a process reaches mature efficiency. A successful transition combines rising output, reliable yields and customer product launches; revenue growth alone does not settle the margin outcome.
AI demand reaches TSMC through customers
HPC represents a broad platform that includes more than AI accelerators. TSMC benefits when chip designers and their customers turn infrastructure budgets into wafer orders and packaged shipments. Changes in customer product mix or inventory can therefore affect timing even when long-term AI demand remains strong.
Advanced packaging completes the supply chain
Leading-edge wafers need packaging capacity to become usable systems. The value of a new fab depends partly on the downstream ability to assemble and deliver those chips. Packaging expansion can support growth, but it also adds investment and execution requirements beyond wafer fabrication.
Overseas production and currency
A more geographically diverse manufacturing footprint adds operating options, but new facilities may have different costs and utilization during their ramp. Revenue is reported in both USD and NTD, while many costs are incurred in Taiwan dollars. Currency and facility mix can change margins even with strong demand.
Earnings quality and investment returns
Q3 non-operating items of NT$34.59 billion were below Q2’s NT$95.83 billion. Operating margin therefore provides a different view from total EPS growth. Capital expenditure uses cash before all its benefits appear in earnings; investment returns require productive capacity and sustained utilization.
04
Two complementary views
How TSMC earns its revenue
TSMC’s foundry model serves chip designers across computing and consumer markets. Technology mix measures the process used to manufacture wafers; platform mix measures the end application. The two charts describe the same business from different angles and should not be added together.
Technology share of wafer revenue
Platform share of total revenue
Older nodes combine the remaining technology categories (21%). HPC is a broad category and is not a separately disclosed AI revenue total.
05
Cash generation and forward outlook
TSMC capital spending, cash flow and guidance
TSMC defines free cash flow as operating cash flow less capital expenditure. Cash dividends of NT$155.59 billion are a separate use of cash. Q3 free cash flow rose from NT$287.36 billion in Q2, while quarterly margins declined. Cash spending and accounting profit follow different schedules.
Q3 cash-flow statement and definition ↗
Gross margin 65–67%; operating margin 56.5–58.5%. Published October 15 with an exchange-rate assumption of NT$31.8 per US$1. These are forecasts, not realized Q4 results.
Management’s annual spending plan, rather than cash already spent. The Q3 call reiterated the budget, allocating most to advanced technologies, alongside specialty processes and packaging-related investment.
06
Nine consecutive reported quarters
TSM earnings history
| Quarter | Revenue (US$B) | USD YoY | EPS (NT$/ordinary) | EPS (US$/ADR) | Gross margin | Released / source |
|---|---|---|---|---|---|---|
| Q3 2026 | 46.72 | 41.2% | 29.43 | 4.60 | 66.4% | Oct 15, 2026 ↗ |
| Q2 2026 | 40.20 | 33.7% | 27.25 | 4.31 | 67.7% | Jul 16, 2026 ↗ |
| Q1 2026 | 35.90 | 40.6% | 22.08 | 3.49 | 66.2% | Apr 16, 2026 ↗ |
| Q4 2025 | 33.73 | 25.5% | 19.50 | 3.14 | 62.3% | Jan 15, 2026 ↗ |
| Q3 2025 | 33.10 | 40.8% | 17.44 | 2.92 | 59.5% | Oct 16, 2025 ↗ |
| Q2 2025 | 30.07 | 44.4% | 15.36 | 2.47 | 58.6% | Jul 17, 2025 ↗ |
| Q1 2025 | 25.53 | 35.3% | 13.94 | 2.12 | 58.8% | Apr 17, 2025 ↗ |
| Q4 2024 | 26.88 | 37.0% | 14.45 | 2.24 | 59.0% | Jan 16, 2025 ↗ |
| Q3 2024 | 23.50 | 36.0% | 12.54 | 1.94 | 57.8% | Oct 17, 2024 ↗ |
07
Earnings and assumptions
TSM valuation: earnings and P/E scenarios
Reported earnings provide a starting point for valuation; the multiple reflects expectations for growth, manufacturing returns and risk. The sensitivity table uses actual trailing earnings and adjustable assumptions. Longer-term analysis should also consider the 2nm ramp, overseas-fab economics, capital spending and non-operating gains in reported EPS.
Compare prices implied by different P/E assumptions using trailing-four-quarter diluted earnings. The editable 20×, 25× and 30× examples are valuation scenarios, not price targets.
| Scenario | P/E multiple | Ordinary-share price (TWD/share) | ADS price (USD/ADS) |
|---|---|---|---|
| Scenario 1 | 20.00× | NT$1,965.20 | — |
| Scenario 2 | 25.00× | NT$2,456.50 | — |
| Scenario 3 | 30.00× | NT$2,947.80 | — |
Enter a valid USD ADS price and USD/TWD exchange rate to see its implied trailing P/E.
Ordinary-share scenario price = TWD EPS × P/E. USD ADS scenario price = ordinary-share scenario price × 5 ÷ TWD per USD. The earnings basis comes from historical results and includes no assumed future growth.
The NT$98.26 basis sums Q4 2025, Q1 2026, Q2 2026 and Q3 2026 reported diluted EPS. Q2 includes NT$2.24 per ordinary share from Vanguard disposal and mark-to-market gains. Scenario prices use reported earnings, including this contribution; they are not an estimate of normalized earnings.
08
SEC 13F
TSM institutional ownership
Compare the U.S. depositary-share positions reported by BasisPilot’s tracked managers. Coverage and reporting dates describe the filing sample; they do not measure all institutional ownership or current transactions.
Managers with active reported positions7
Reported ownership periodsJun 30, 2026
09
Fund exposure
Research TSM through semiconductor ETFs
VanEck’s holdings list includes TSM alongside chip designers and equipment companies. Those businesses respond differently to the semiconductor cycle, so an ETF’s portfolio creates broader industry exposure than a TSM position alone.
View issuer holdings and their date ↗Look through direct shares and fund holdings
Owning TSM directly and through a semiconductor ETF can increase exposure to the same company and shared customers. Check each fund’s dated holdings and weights before adding exposures together. BasisPilot’s ETF calculator currently uses labeled synthetic examples.
Explore the ETF overlap calculator →10
Customers and demand channels
TSMC in the semiconductor ecosystem
NVDA →
AI accelerators and system demand influence the manufacturing and packaging opportunity. NVIDIA’s product margins and TSMC’s foundry margins measure different businesses.
AMD →CPU and GPU demand provides another view of computing orders. Product adoption at a chip designer should be translated into manufacturing requirements rather than treated as identical foundry growth.
AVGO →Custom accelerators and networking are additional AI infrastructure demand channels. Broadcom also operates software businesses, making consolidated growth and margin a different comparison.
11
Company-specific risks
What could weaken TSM’s investment case?
Customer spending and inventory
Slower AI infrastructure budgets or excess inventories at chip designers can reduce orders or change the product mix. HPC growth and customer deployment plans provide more useful signals than assuming every announced AI budget becomes immediate foundry revenue.
Process and packaging execution
Yield shortfalls, equipment delays or packaging constraints can limit usable deliveries and raise unit costs. The pace of revenue conversion and gross margin should be considered together during a new-node ramp.
Geopolitics and export restrictions
TSMC’s manufacturing footprint and customer access are exposed to cross-border policies and regional disruptions. These risks can affect production, deliveries and permitted customer demand, as well as the valuation investors place on future cash flows.
Capital intensity and overseas costs
Investment precedes revenue and continues through maintenance and process transitions. New facilities with lower initial utilization can depress returns, particularly if customer demand slows while depreciation continues.
Currency and recurring earnings
NTD appreciation can affect the relationship between dollar revenue and local costs. Investment gains can also lift EPS without the same change in operating profit; neither effect should be extrapolated automatically into the next quarter.
12
BasisPilot Insights
Related TSMC research
Oct 16, 2026
TSMC's Record Q3 Profit Wasn't Enough for Chip Stocks: The New Test for AI Capital Spending
TSMC reported NT$1.494 trillion in Q3 revenue and NT$763.06 billion in profit. Why the record figures did not immediately rescue TSM and U.S. AI stocks.
Oct 9, 2026TSMC’s September Sales Rose 54.6%, Yet Chip Stocks Sank: The Two Sides of the AI Demand Debate
TSMC reported NT$511.86 billion in September revenue, up 54.6% year over year, as U.S. semiconductor stocks fell 3.4%. The distinction between wafer demand and AI customer economics matters.
13
FAQ
TSM investor questions
What is TSMC’s latest reported quarterly revenue?
TSMC reported Q3 2026 revenue of US$46.72 billion, up 41.2% year over year. Taiwan-dollar revenue was NT$1,494.24 billion, up 50.9%. These consolidated TIFRS results cover the quarter ended September 30 and were announced October 15, 2026.
How much revenue comes from advanced nodes?
In Q3 2026, 2nm, 3nm, 5nm and 7nm represented 8%, 33%, 28% and 10% of wafer revenue, totaling 79%. Platform revenue uses a different classification and denominator.
Is TSMC’s HPC revenue the same as AI revenue?
No. HPC accounted for 68% of Q3 platform revenue and includes demand beyond AI accelerators. The platform table does not provide a separately reported AI revenue total.
Why are ADR earnings different from Taiwan-share EPS?
Each TSM ADS represents five Taiwan ordinary shares. Q3 diluted EPS was NT$29.43 per ordinary share and US$4.60 per ADR. Currency and the five-share ratio must both be respected.
Has TSMC released Q3 2026 earnings?
Yes. Complete quarterly results were published October 15, 2026. The October outlook for Q4 revenue of US$52.3–54.3 billion is forward guidance and not realized Q4 revenue.
What was TSMC’s Q3 free cash flow?
NT$919.77 billion operating cash flow less NT$443.21 billion capex equals NT$476.56 billion company-defined free cash flow. NT$155.59 billion of cash dividends is a separate use of cash.
What earnings basis does the TSM valuation tool use?
It sums ordinary-share EPS for Q4 2025 through Q3 2026 to NT$98.26. Adjustable P/E and USD/TWD assumptions produce scenario prices, not live quotes or company targets. Reported earnings include non-operating items.
Can ETFs provide exposure to TSM?
VanEck’s SMH holdings page lists TSM alongside other semiconductor companies. An ETF combines foundry, chip-design and equipment exposure, so its performance need not match TSM shares. The issuer’s dated holdings are the source for current composition; the fund name alone does not establish a weight.
Are TSM’s 13F holdings real-time positions?
No. The ownership section links to delayed quarter-end filings from BasisPilot’s tracked managers. It identifies the reporting period and coverage, not all institutional ownership, current trades or historical purchase costs. U.S. ADR/ADS positions should also be distinguished from Taiwan ordinary shares.
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Dated primary evidence
TSMC sources and reporting dates
Complete financial period2026-09-30Monthly sales period2026-09-30Research review2026-10-29
Quarterly figures use the issuer’s consolidated TIFRS results. Revenue growth is labeled by currency; Taiwan common-share EPS and dollar ADR EPS remain separate. Monthly sales, management guidance and delayed ownership filings retain their own reporting periods.