Taiwan Semiconductor Manufacturing Co. delivered its sixth straight record quarter — and the market shrugged. Net profit jumped 68.7% to NT$763.06 billion while revenue rose 50.9% to NT$1.49 trillion (about $46.72 billion), handily beating forecasts. Yet the stock still fell, underscoring a harder truth: investors are no longer rewarding AI spending on faith alone.
The global chip rout continued around the results. SK hynix plunged 11.1%, Samsung Electronics dropped 9.5% and Kioxia sank 12.3%, even as TSMC itself held up relatively better with a 2% decline.
The numbers behind the beat
Gross margin stayed an elite 66.4% with operating margin at 58.7%. Advanced nodes drove the growth: 3-nanometer wafers made up 33% of revenue, while 2-nanometer technology already accounted for 8%, up from 3% last quarter. High-performance computing — the AI business — represented 68% of revenue.
Management raised its outlook: fourth-quarter revenue of $52.3 billion to $54.3 billion, and full-year 2026 revenue growth of about 44% in US dollars, up from the July outlook of just over 40%. Capital expenditure is planned at $60 billion to $64 billion for the year.
“We did not see any sign of slowdown”
CEO C.C. Wei pushed back on fears that AI chip demand is cooling. Asked about TSMC’s forecast that AI accelerator revenue would grow at a mid-to-high-50% annual rate from 2024 to 2029, Wei said “we did not see any sign of slowdown,” adding the rate “probably will be higher.”
TSMC’s dominance underpins the argument: it controls about 73% of the third-party chip manufacturing market, according to TrendForce. Nvidia has reportedly asked Samsung, SK Hynix and Micron to use TSMC’s 3-nanometer process for next-generation high-bandwidth-memory base dies — deepening the world’s most important chip supply chain even as investors question what it all costs.
The AI question
The selloff reflects a market no longer willing to take AI demand on faith. Hyperscalers have committed hundreds of billions to data centers, and investors want proof the spending converts to revenue. TSMC’s raised outlook — and Wei’s insistence there is ‘no sign of slowdown’ — is the industry’s strongest rebuttal yet, but the stock reaction shows skepticism runs deep.
