Shares of Taiwan Semiconductor Manufacturing Company (TSM) fell 4% as the contract chipmaker’s strong quarterly results did little to lift sentiment around the AI business amid a growing industry-wide selloff.
TSMC posted a sixth consecutive quarter of record profits, with net income up nearly 69% and revenue up 51%.
The Taiwan-based contract chipmaker’s sales are expected to reach $54.3 billion for the current quarter, beating analyst estimates.
“Demand for our cutting-edge technologies continues to be extremely robust,” CC Wei, CEO of TSMC, said on the call. “We are seeing growing demand for AI, fueled by the growing adoption of agentic AI as we move from chatbot to AI assistance.”
Gross margin for the third quarter was 66.4%, down from 67.7% in the second quarter. TSMC expects a gross margin of 65% to 67% for the fourth quarter.
“Given continued and robust multi-year demand from our customers, including the emerging agentic AI market, we reaffirm that our full-year 2026 capital budget will be between $60 billion and $64 billion,” said Wendell Huang, CFO of TSMC.
The company expects capital spending from 2026 to 2028 “to be even more significantly higher than the past three years” as it continues to invest heavily to support its customers’ growth, Huang added.
420.37 -9.63 (-2.24%)
At 11:22:44 a.m. EDT. Open market.
TSM INTC
The company is closely tied to building and running AI infrastructure because it makes advanced processors designed by chip giants like Nvidia (NVDA), AMD (AMD), and Broadcom (AVGO).
TSMC stock is up more than 41% year to date as of Wednesday’s close. Stocks hit all-time highs earlier this month after Tesla (TSLA) and SpaceX (SPCX) CEO Elon Musk acknowledged early talks with the world’s largest chip foundry about possible collaboration on its Terafab semiconductor initiative in Texas.
TSMC, which is already undergoing significant expansion in Arizona as part of a multi-year plan to manufacture chips in the United States for its customers, has confirmed it is exploring Texas.
“We’re sending the teams to Texas to do all the evaluation,” Wei said on the call. “We are also talking with one of our customers who is trying to build a factory, Terafab, let me be more specific.”
Ines Ferre is a senior economics reporter for Yahoo Finance.
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