Taiwan Semiconductor Manufacturing Company Limited

(New York Stock Exchange)
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Bullish +65

Taiwan Semiconductor (TSM) Stock Drops 3% Even After a Record Quarter

Earnings report Financial outlook AI-generated analysis

πŸ“‰ TSM stock dropped 3% or $15.12 on Thursday despite reporting record third-quarter results that beat revenue and profit estimates.

πŸ’° Net profit reached NT$763.1 billion, up 68.7% year-over-year, marking the sixth straight quarter of record earnings.

πŸ“ˆ Revenue surged 41.2% to approximately $46.4 billion, exceeding analyst forecasts based on LSEG SmartEstimates.

πŸ›‘οΈ Operating margin hit 58.7%, surpassing the top of the company's 58% guidance range and highlighting strong pricing power.

πŸ’§ Free cash flow jumped dramatically to NT$476.56 billion, more than tripling the figure from a year ago.

πŸ”¬ Advanced technology nodes dominated production, with 3-nanometer chips making up 33% of wafer revenue and advanced tech at 79% total.

πŸ’» High-performance computing led revenue generation at 68%, while automotive was the fastest-growing segment up 23% from the prior quarter.

🏭 TSMC is expanding its U.S. footprint with a planned $265 billion investment in Arizona and is evaluating a potential new site in Texas.

πŸ’΅ The board approved a NT$7.00 cash dividend for the second quarter, reflecting confidence in shareholder returns.

Bullish Signals
  • Net profit reached NT$763.1 billion, representing a massive 68.7% year-over-year increase and marking the sixth consecutive quarter of record earnings.
  • Revenue grew 41.2% to approximately $46.4 billion, significantly topping analyst estimates and demonstrating robust demand for its semiconductor manufacturing services.
  • Operating margin expanded to 58.7%, exceeding the upper bound of guidance and underscoring the company's strong pricing power in a high-demand AI chip market.
  • Free cash flow surged to NT$476.56 billion, more than tripling the previous year's figure to NT$139.38 billion, indicating exceptional operational efficiency.
  • The company is aggressively expanding its U.S. manufacturing footprint with a confirmed $265 billion investment in Arizona and exploring additional capacity in Texas.
Risk Factors
  • Shares declined 3% on Thursday despite the strong earnings beat, suggesting investors may be taking profits or pricing in future growth expectations.
  • The stock price drop indicates that the market reaction was negative even though both revenue and profit figures topped analyst estimates.
Full Analysis
Taiwan Semiconductor Manufacturing Company (TSM) reported record third-quarter financial results that significantly exceeded analyst expectations, yet its stock price fell by approximately 3% on Thursday. Despite the market reaction, the company posted net profit of NT$763.1 billion, a 68.7% increase year-over-year, and revenue rose 41.2% to roughly $46.4 billion, surpassing the consensus forecast. The quarter marked the sixth consecutive period of record net profit for TSM, driven by strong demand for AI chips which bolstered its pricing power. Operating margins expanded to 58.7%, exceeding the upper end of the company's guidance range, while free cash flow surged to NT$476.56 billion from NT$139.38 billion a year prior. TSMC continues to lead in advanced node production, with 3-nanometer chips accounting for 33% of wafer revenue and advanced technologies comprising 79% of the total mix. High-performance computing remains the dominant platform at 68% of revenue, while automotive sales grew by 23% quarter-over-quarter. Looking ahead to strategic expansion, TSMC has outlined plans for a massive $265 billion investment in its Arizona facility and is reportedly evaluating a potential new investment in Texas. This geographic diversification aims to further expand its U.S. footprint beyond the initial Arizona project.