TSMC Poised for Sixth Consecutive Record Profit as AI Demand Surges

Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker and a leading producer of advanced artificial intelligence processors, is expected to report its sixth consecutive quarter of record earnings as technology companies continue to invest heavily in AI infrastructure. Demand for TSMC's advanced chip manufacturing services and its sophisticated Chip-on-Wafer-on-Substrate (CoWoS) packaging technology remains strong, according to analysts. These capabilities are essential for producing powerful processors used in AI systems, data centres and high-performance computing applications.

The sustained demand has helped push TSMC's market value to approximately $2.1 trillion, making it Asia's most valuable publicly traded company. The company supplies advanced chips for major technology firms, including Nvidia and Apple, and its market capitalisation is now nearly twice that of South Korean competitor Samsung Electronics.

TSMC is expected to announce third-quarter results on Thursday, with analysts forecasting net profit of NT$746.3 billion, or around $23.4 billion. This would represent a 65% increase from the same period last year, according to an LSEG SmartEstimate compiled from 16 analysts. The estimate gives greater weight to forecasts from analysts with a stronger record of accuracy.

If net profit exceeds NT$706.56 billion, the company will establish another quarterly earnings record and extend its year-on-year profit growth streak to 11 consecutive quarters. The forecast follows a strong revenue performance, with TSMC reporting a 50% annual increase in third-quarter revenue last Thursday, beating market expectations and setting a new record. Investors will closely examine the company's earnings announcement and management's outlook for the final quarter of 2026. The earnings call, scheduled for 0600 GMT on Thursday, is expected to provide updated guidance on revenue growth, profitability and investment plans.

Morgan Stanley analyst Charlie Chan said in an October 6 research report that TSMC could raise its full-year revenue growth forecast to the low-to-mid-40% range. The company currently expects annual growth of more than 40%, with strong demand for its advanced 3-nanometre chips supporting the outlook. These chips are increasingly important to technology companies seeking greater computing performance and improved energy efficiency for AI workloads.

Alongside its earnings outlook, TSMC's international expansion plans are attracting attention. The company is investing heavily in the United States, with its planned investment in Arizona reaching $165 billion after an additional $100 billion commitment announced in July. The chipmaker is also considering whether to expand its manufacturing presence in Texas. Reuters reported in September that TSMC was evaluating a possible investment in the state. Tesla chief executive Elon Musk also said last week that his companies would build and operate the Terafab AI chip complex, with TSMC potentially leasing part of the facility.

The possibility of a Texas expansion could become a topic of discussion during Thursday's earnings call. Chan believes additional capacity may eventually be necessary as customer demand increases and space at TSMC's Arizona site becomes more constrained over the next five years. , Morningstar senior equity analyst Phelix Lee believes there is little immediate need for the company to commit to a Texas project, particularly because several factories planned for Arizona have yet to be built. Lee considers Texas a promising option for expansion during the 2030s or 2040s, pointing to the state's established semiconductor ecosystem and available technical talent. He also suggested that the prospect of further investment could help the company navigate potential changes in US trade policy and other government measures.

TSMC's expansion strategy reflects the growing importance of securing reliable semiconductor manufacturing capacity as demand for AI computing accelerates. Building advanced chip factories requires enormous capital investment, specialised equipment and highly skilled workers, making decisions about where and when to expand particularly important.

The company has already increased its investment budget in response to rising demand. During its July earnings call, TSMC raised its capital expenditure forecast for 2026 to between $60 billion and $64 billion, compared with its earlier estimate of $52 billion to $56 billion at the upper end. TSMC's strong performance has also supported its share price. The company's Taipei-listed shares have gained 63% so far this year, broadly in line with the wider market's advance of 69%.

The upcoming earnings announcement will offer a clearer indication of whether the current wave of AI investment can continue supporting TSMC's rapid growth. Investors will be looking for evidence that demand for advanced processors remains durable, while also assessing the costs and long-term benefits of the company's ambitious manufacturing expansion. As technology companies race to build increasingly powerful AI systems, TSMC remains at the centre of the semiconductor supply chain. Its ability to maintain technological leadership, increase production capacity and manage rising investment costs will be crucial to sustaining its earnings momentum in the years ahead.