TSMC shares rise ahead of closely watched Q3 earnings

On Wednesday, TSMC shares experienced a slight recovery, bouncing back from recent losses as market participants awaited another set of impressive quarterly earnings from the world's largest contract chipmaker. The Taiwanese company's stock increased by 1.4% to T$2,525, marking a turn of events after touching a near two-week low in the previous trading session.

Anticipation for TSMC's financial performance was high, as the chipmaker was expected to report a net profit of T$746.3 billion ($23.4 billion) for the quarter ending September 30. This forecasted profit represents a sixth consecutive quarter of record profits, marking a 65% increase compared to the Q3 2025 figures. Notably, TSMC has consistently delivered earnings growth for the past 10 quarters, largely driven by the soaring demand for chips in the artificial intelligence sector.

The tech giant remains the world's largest contract chipmaker by production capacity, and plays a pivotal role as a bellwether for chip demand. Key customers of TSMC include AI chip manufacturing leader Nvidia. Beyond earnings, investors will closely scrutinize TSMC's outlook on chip demand, AI, and its strategies to meet the escalating demand by expanding its production capacity.

TSMC is planning to invest $265 billion in building new chipmaking facilities, including an additional $100 billion disclosed in July, primarily in Arizona, United States.

However, the company's expansion plans may slightly impact its margins in the upcoming quarters. Despite this, TSMC anticipates a revenue growth of over 40% for 2026. The earnings run-up was preceded by a strong Q3 performance from chipmaking equipment manufacturer ASML, another sector bellwether. ASML reported superior net sales and revenue for Q3, and reiterated its outlook for the full year.

The company, though, cautioned that its current supply plans for 2027 and 2028 are projected to fall short of the excessive customer demand.