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AI-Driven Demand for Advanced Chips Likely to Boost TSM's Q4 Revenues
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Key Takeaways
TSM expects Q4 revenues of $32.2B-$33.4B, up 22% year over year at the midpoint.
AI-driven demand for 3-nm and 5-nm chips continues to fuel strong top-line performance.
Higher costs from global expansion may have negatively impacted margins.
Taiwan Semiconductor Manufacturing Company Ltd. (TSM - Free Report) is scheduled to release its fourth-quarter 2025 earnings on Jan. 15. The world’s top contract chipmaker looks well-positioned for another strong quarter, supported by the surging demand for artificial intelligence (AI) chips and its leadership in advanced semiconductor technologies.
Click here to know how TSM’s overall fourth-quarter results are likely to be.
Advanced Nodes Drive TSM’s Revenue Growth
Taiwan Semiconductor projects fourth-quarter revenues to come between $32.2 billion and $33.4 billion, implying a year-over-year increase of approximately 22% at the midpoint. The Zacks Consensus Estimate for the top line is pegged at $32.63 billion, indicating year-over-year growth of 21.4%.
The growing adoption of AI in cloud services, consumer devices and data centers continues to fuel the need for powerful, energy-efficient chips. TSMC remains a key beneficiary of this trend. Its dominance in 3-nanometer (3nm) and 5-nm manufacturing nodes has been central to this surge, as major chip designers like NVIDIA, Apple and Advanced Micro Devices rely heavily on its cutting-edge processes.
Taiwan Semiconductor has been witnessing strong demand for its AI-focused products, including Chip-on-Wafer-on-Substrate advanced packaging solutions. This segment has seen consistent demand exceeding supply, reflecting the company’s critical role in powering AI and high-performance computing applications.
Despite its strengths, Taiwan Semiconductor witnesses near-term hurdles. Geopolitical tensions, particularly between the United States and China, are expected to have impacted the company’s overall revenue growth in the to-be-reported quarter.
Taiwan Semiconductor Manufacturing Company Ltd. Price and EPS Surprise
While revenue momentum looks solid, rising operational costs are likely to have hurt Taiwan Semiconductor’s gross margin in the to-be-reported quarter. Taiwan Semiconductor’s aggressive global expansion — with new fabs in Arizona, Japan and Germany — has added cost burdens from higher labor and utility expenses. These sites, though strategically important for geographic diversification and customer proximity, are expected to reduce gross margins by 2-3% annually over the next few years as production ramps up.
Despite the prevailing challenges, analysts remain optimistic about TSM’s bottom-line growth in the to-be-reported quarter. The Zacks Consensus Estimate for Taiwan Semiconductor’s fourth-quarter earnings has been revised upward by 4 cents to $2.76 per share, indicating year-over-year growth of 21.4%.
TSM’s Zacks Rank & Stocks to Consider
Currently, Taiwan Semiconductor carries a Zacks Rank #4 (Sell).
The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 earnings has been revised upward by 73.2% to $31.36 per share in the past 30 days, suggesting an increase of 278.3% from fiscal 2025’s reported figure. Micron Technology shares have surged 264% over the past year.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2026 earnings has moved upward by 20 cents to $4.66 per share in the past 60 days, implying a year-over-year improvement of approximately 55.9%. NVIDIA shares have risen 38.7% in the trailing 12 months.
The Zacks Consensus Estimate for Amtech Systems’ fiscal 2026 earnings has moved northward by 186.7% to 43 cents per share over the past 30 days and suggests a year-over-year increase of 760%. Amtech Systems shares have soared 156.2% over the past year.
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AI-Driven Demand for Advanced Chips Likely to Boost TSM's Q4 Revenues
Key Takeaways
Taiwan Semiconductor Manufacturing Company Ltd. (TSM - Free Report) is scheduled to release its fourth-quarter 2025 earnings on Jan. 15. The world’s top contract chipmaker looks well-positioned for another strong quarter, supported by the surging demand for artificial intelligence (AI) chips and its leadership in advanced semiconductor technologies.
Click here to know how TSM’s overall fourth-quarter results are likely to be.
Advanced Nodes Drive TSM’s Revenue Growth
Taiwan Semiconductor projects fourth-quarter revenues to come between $32.2 billion and $33.4 billion, implying a year-over-year increase of approximately 22% at the midpoint. The Zacks Consensus Estimate for the top line is pegged at $32.63 billion, indicating year-over-year growth of 21.4%.
The growing adoption of AI in cloud services, consumer devices and data centers continues to fuel the need for powerful, energy-efficient chips. TSMC remains a key beneficiary of this trend. Its dominance in 3-nanometer (3nm) and 5-nm manufacturing nodes has been central to this surge, as major chip designers like NVIDIA, Apple and Advanced Micro Devices rely heavily on its cutting-edge processes.
Taiwan Semiconductor has been witnessing strong demand for its AI-focused products, including Chip-on-Wafer-on-Substrate advanced packaging solutions. This segment has seen consistent demand exceeding supply, reflecting the company’s critical role in powering AI and high-performance computing applications.
Despite its strengths, Taiwan Semiconductor witnesses near-term hurdles. Geopolitical tensions, particularly between the United States and China, are expected to have impacted the company’s overall revenue growth in the to-be-reported quarter.
Taiwan Semiconductor Manufacturing Company Ltd. Price and EPS Surprise
Taiwan Semiconductor Manufacturing Company Ltd. price-eps-surprise | Taiwan Semiconductor Manufacturing Company Ltd. Quote
Overseas Expansions to Hurt TSM’s Margins
While revenue momentum looks solid, rising operational costs are likely to have hurt Taiwan Semiconductor’s gross margin in the to-be-reported quarter. Taiwan Semiconductor’s aggressive global expansion — with new fabs in Arizona, Japan and Germany — has added cost burdens from higher labor and utility expenses. These sites, though strategically important for geographic diversification and customer proximity, are expected to reduce gross margins by 2-3% annually over the next few years as production ramps up.
Despite the prevailing challenges, analysts remain optimistic about TSM’s bottom-line growth in the to-be-reported quarter. The Zacks Consensus Estimate for Taiwan Semiconductor’s fourth-quarter earnings has been revised upward by 4 cents to $2.76 per share, indicating year-over-year growth of 21.4%.
TSM’s Zacks Rank & Stocks to Consider
Currently, Taiwan Semiconductor carries a Zacks Rank #4 (Sell).
Some better-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Micron Technology (MU - Free Report) , NVIDIA (NVDA - Free Report) and Amtech Systems (ASYS - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 earnings has been revised upward by 73.2% to $31.36 per share in the past 30 days, suggesting an increase of 278.3% from fiscal 2025’s reported figure. Micron Technology shares have surged 264% over the past year.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2026 earnings has moved upward by 20 cents to $4.66 per share in the past 60 days, implying a year-over-year improvement of approximately 55.9%. NVIDIA shares have risen 38.7% in the trailing 12 months.
The Zacks Consensus Estimate for Amtech Systems’ fiscal 2026 earnings has moved northward by 186.7% to 43 cents per share over the past 30 days and suggests a year-over-year increase of 760%. Amtech Systems shares have soared 156.2% over the past year.