TSMC Reports Record Revenue as AI Demand Outpaces Supply

Taiwan Semiconductor Manufacturing (TSM) reported record third-quarter revenue of $46.7 billion, a 41% increase from the same period last year. The world's largest contract chipmaker stated that demand for artificial intelligence chips continues to exceed its current production capacity, a condition management expects to persist. As of October 15, 2026, TSM stock has risen approximately 39% year-to-date.

The company's high-performance computing segment, which includes AI data center chips, generated 68% of total sales in the third quarter. TSMC projects fourth-quarter revenue between $52.3 billion and $54.3 billion, representing year-over-year growth of roughly 58% at the midpoint of that range. On the earnings call, CEO C.C. Wei noted that while TSMC previously forecast annual growth in AI accelerator sales at a mid- to high-50s percentage rate through 2029, actual demand is likely to be higher than those projections.

Wei emphasized that current demand remains far above the company's ability to supply it. Despite this strong AI tailwind, TSMC is approaching 2027 planning cautiously due to macroeconomic uncertainty. Rising component prices are pressuring consumer electronics markets, prompting device makers to increase prices to offset cost inflation. This trend could impact TSMC's smartphone business, which accounted for 21% of its third-quarter revenue.

Wall Street analysts currently expect TSMC earnings to grow 38% annually over the next several years. The stock trades at approximately 19 times these 2027 earnings estimates. The Motley Fool highlighted this valuation as attractive given the prospect of high double-digit earnings growth, characterizing the stock as a compelling buy.