TSMC (TSM.US) reported strong growth in both revenue and earnings in the third quarter of 2025, exceeding market expectations and confirming its role as a leader in AI chips. The company’s profits are driven by a global wave of investment in artificial intelligence infrastructure, with Nvidia, Apple, and the broadly defined high-performance computing (HPC) segment being the largest customers. The high share of the most advanced technological processes (3 nm and 5 nm) allowed the company to maintain a strong pricing position and record margins. The company’s management has raised its revenue growth forecast for the whole of 2025 to the “mid-30%” range, pointing to a continued influx of orders for AI and HPC chips, although they warn of geopolitical risks and potential trade disruptions.
Following the announcement of the results, TSMC’s share price on the Taiwanese stock exchange rose 1.4% and remains close to historic highs, confirming high expectations for continued growth in the coming quarters. Capital expenditures for 2025 have been raised to $40-42 billion, reflecting extensive investments in new production capacity both in the United States and abroad. At the same time, the advanced technology segment already accounts for over 74% of wafer sales, and the company remains a key beneficiary of the AI infrastructure boom despite market uncertainty and pressure related to the US-China trade war.
Key figures and expectations (compared to consensus):
- Revenue: NT$989.92 billion (+30% y/y, expected NT$967.7 billion)
- Net profit: NT$452.3 billion (+39% y/y, expected NT$405.5 billion)
- Gross margin: 59.5% (previous quarter: 58.6%, expected 57.1%)
- Operating profit: NT$500.7 billion (+39% y/y, expected NT$458.6 billion)
- Operating margin: 50.6% (previous quarter: 49.6%, expected 47.3%)
- Capex (capital expenditure) 2025: USD 40-42 billion (previous forecast USD 38-42 billion)
- Share of AI/HPC segments in sales: approx. 60% of revenue, advanced chips (>7 nm): 74%
Forecast for fiscal year 2025
- Revenue growth: approximately 30% y/y in the middle range (previously ~30% y/y) → implies ~USD 117.4–121.9 billion (expected USD 120.6 billion)
- CapEx: USD 40–42 billion (previously USD 38–42 billion)
- Gross margin dilution from overseas factories (fiscal year 2025): 1%–2% (previously 2%–3%)
- Gross margin dilution from overseas factories (long-term outlook): 2%–3% in the early stages; 3%–4% in the later stages
Q4 2025 forecast
- Revenue: $32.2–33.4 billion (expected $32.0 billion); -1% q/q decline at the midpoint of the forecast
- Gross margin: 59%–61%
- Operating margin: 49%–51%
The company’s shares gained modestly on the Taiwanese stock exchange, but we still have to wait for trading to start in the US to determine the actual reaction of investors to the results. From a technical perspective, the shares have experienced strong growth, which in scale is almost identical to the momentum seen in 2023, after which TSM shares experienced a deeper downward correction. At the moment, however, the shares are maintaining a stable, long-term upward trend.
Source: xStation
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