The Investor
15 Oct 2026, 14:39
TSMC Falls 3.8% Despite Strong Q3 Growth as Rate Fears Pressure Chip Stocks
Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) shares fell about 3.8% even after the company reported another strong quarter, as a broader selloff in semiconductor stocks appears to be outweighing the strength of its earnings.
TSMC reported third-quarter revenue of NT$1.49 trillion, up 50.9% year over year, while net income rose 68.7% to NT$763.1 billion. Diluted EPS increased by the same percentage to NT$29.43, equivalent to $4.60 per ADR.
In U.S. dollar terms, quarterly revenue reached $46.72 billion, up 41.2% from a year earlier and 16.2% from the second quarter. Gross margin was 66.4%, operating margin 58.7%, and net profit margin 51.1%.
Leading-edge demand remained the key driver. Advanced nodes of 7-nanometer and below accounted for 79% of wafer revenue, including 33% from 3-nanometer, 28% from 5-nanometer and 8% from the new 2-nanometer process.
TSMC also issued a strong fourth-quarter outlook, forecasting revenue of $52.3 billion to $54.3 billion, gross margin of 65% to 67%, and operating margin of 56.5% to 58.5%. Management said demand for advanced process technologies remains strong, with a steep ramp-up in 2-nanometer expected to support Q4.
The stock decline therefore appears less related to company-specific fundamentals and more to the broader pressure on chip and growth stocks. Recent U.S. macro data have revived concerns that inflation remains too strong and that the Federal Reserve could keep rates higher for longer, or potentially tighten further. Higher rate expectations tend to pressure high-valuation semiconductor and technology stocks by increasing discount rates.
TSMC’s results themselves remain strong, with rapid revenue growth, very high margins and robust advanced-node demand. The 3.8% drop appears to reflect a macro-driven semiconductor selloff rather than deterioration in the company’s near-term operating outlook.
Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) shares fell about 3.8% even after the company reported another strong quarter, as a broader selloff in semiconductor stocks appears to be outweighing the strength of its earnings.
TSMC reported third-quarter revenue of NT$1.49 trillion, up 50.9% year over year, while net income rose 68.7% to NT$763.1 billion. Diluted EPS increased by the same percentage to NT$29.43, equivalent to $4.60 per ADR.
In U.S. dollar terms, quarterly revenue reached $46.72 billion, up 41.2% from a year earlier and 16.2% from the second quarter. Gross margin was 66.4%, operating margin 58.7%, and net profit margin 51.1%.
Leading-edge demand remained the key driver. Advanced nodes of 7-nanometer and below accounted for 79% of wafer revenue, including 33% from 3-nanometer, 28% from 5-nanometer and 8% from the new 2-nanometer process.
TSMC also issued a strong fourth-quarter outlook, forecasting revenue of $52.3 billion to $54.3 billion, gross margin of 65% to 67%, and operating margin of 56.5% to 58.5%. Management said demand for advanced process technologies remains strong, with a steep ramp-up in 2-nanometer expected to support Q4.
The stock decline therefore appears less related to company-specific fundamentals and more to the broader pressure on chip and growth stocks. Recent U.S. macro data have revived concerns that inflation remains too strong and that the Federal Reserve could keep rates higher for longer, or potentially tighten further. Higher rate expectations tend to pressure high-valuation semiconductor and technology stocks by increasing discount rates.
TSMC’s results themselves remain strong, with rapid revenue growth, very high margins and robust advanced-node demand. The 3.8% drop appears to reflect a macro-driven semiconductor selloff rather than deterioration in the company’s near-term operating outlook.
