Key takeaways
- TSMC forecasts up to $54.3 billion in revenue
- AI chip stocks retreat despite record semiconductor demand
- Rising financing costs threaten confidence in AI investments
Taiwan Semiconductor Manufacturing Company (NYSE: TSM) expects fourth-quarter revenue to reach as much as $54.3 billion, signaling continued strength in artificial intelligence chip demand even as semiconductor stocks suffer a global selloff.
The world's largest contract chipmaker issued its forecast on October 15 after reporting $46.72 billion in third-quarter revenue and record net profit of approximately $23.6 billion. However, TSMC shares fell around 2% in Taiwan, while Nvidia, AMD and other chip stocks faced renewed selling pressure.
The contrast highlights a growing divide between semiconductor companies' financial performance and investors' concerns about the sustainability of the AI investment boom.
TSMC Expects Q4 Revenue to Reach $54.3 Billion
According to TSMC's official results, fourth-quarter revenue is expected to range between $52.3 billion and $54.3 billion.
At the $53.3 billion midpoint, the forecast represents approximately 14% sequential growth and 58% growth from a year earlier.
| Financial Metric | Q3 2026 Actual | Q4 2026 Guidance |
|---|---|---|
| Revenue | $46.72B | $52.3B–$54.3B |
| Gross margin | 66.4% | 65%–67% |
| Operating margin | 58.7% | 56.5%–58.5% |
Source: TSMC quarterly earnings presentation, October 15, 2026.
The company also raised its full-year revenue growth forecast to approximately 44% in US dollar terms, up from its previous expectation of around 40%.
TSMC's latest guidance builds on the 69% profit increase reported earlier Thursday, suggesting orders for advanced semiconductors remain robust.
Its newest 2-nanometer manufacturing technology contributed 8% of wafer revenue during the third quarter, compared with just 3% in Q2.
However, ramping up advanced production is expensive. TSMC expects fourth-quarter gross margins of 65%–67%, with initial 2nm production costs and overseas factory expansion potentially weighing on profitability.
AI Chip Stocks Fall as Investors Question Spending Boom
Despite TSMC's strong outlook, semiconductor stocks remained under pressure across major global markets.
On October 15, South Korea's Kospi dropped approximately 7.6%, while Japan's Nikkei 225 declined 4.9% and Taiwan's Taiex lost 3.4%.
In the United States, Nvidia, Broadcom and AMD also faced selling pressure following Wednesday's technology-sector decline.
AMD shares had already dropped 5.7% on October 14, reflecting concerns over semiconductor valuations and the durability of AI infrastructure spending.
The retreat follows a broader AI chip selloff that affected ASML despite the Dutch equipment manufacturer's strong quarterly results.
Investors are increasingly questioning whether technology companies can generate sufficient returns from the hundreds of billions being committed to data centers, specialized processors and electrical infrastructure.
Financing costs are another concern. Shares of CoreWeave recently plunged 13% as yields on the AI infrastructure company's bonds approached 15%, raising questions about the cost of funding future expansion.
TSMC Maintains Up to $64 Billion in Capital Spending
TSMC remains confident enough in future demand to maintain its 2026 capital expenditure budget of $60 billion–$64 billion.
Management expects investment to increase over the coming years as customers demand greater manufacturing capacity and advanced packaging technology.
The company has also outlined a major Arizona expansion, increasing its long-term US investment commitment as semiconductor supply chains become strategically important.
Still, rising capital expenditures introduce risks if AI customers eventually slow their orders.
