Taiwan Semiconductor Q3: Revenue Is In, but Margins and Guidance Still in Question

Taiwan Semiconductor Manufacturing Co. TSM reports its third-quarter 2025 results before the market opens on Thursday, October 16. Analysts expect EPS of $2.63, roughly 36% higher than a year ago. The stock has surged 54% year to date and more than 115% since April's lows, reflecting investor confidence in the company's central role in the AI supply chain.

Earlier this month, TSMC's preliminary sales data confirmed just how strong the quarter had been. September revenue rose 31.4% YoY to NT$330,980 million ($10.2 billion), according to TSMC's monthly sales report, bringing Q3 revenue to NT$989,918 billion ($32.3 billion), up 37% YoY. These numbers point to robust demand for 3nm and 5nm chips used in AI accelerators, smartphones, and high-performance computing, with NVIDIA NVDA, AMD AMD, and Apple AAPL among its largest customers.

The real test now is profitability. TSMC says its 3nm lines are running at full capacity, and 2nm production remains on schedule for 2026, but higher overseas costs and tariffs, could squeeze margins. The market will be looking for any sign that the company's pricing power can keep margins intact.

Long-term, TSMC's results are viewed as an indicator of global AI hardware demand. The company's growth isn't in question, but it's all about how durable it is. With the stock at record highs, expectations are heavy, but grounded in real earnings momentum. A confident tone on next year's visibility could reassure investors that the AI build-out still has legs, easing fears of an overheating cycle.