Why TSMC stock is in the red after reporting strong Q3 numbers

TSMC stock was in the red in early trading on Thursday, even as the company posted strong quarterly results.

US-listed shares of the Taiwanese chipmaker were down around 0.77% to trade at $302.36.

On the other hand, Nvidia stock rose 1.2%, while Broadcom jumped 1.3% on AI optimism fueled by the company’s results.

At the time of writing, it is not immediately clear why the TSMC stock is feeling the heat.

However, the stock has been on a tear over the past few months. In the past six months, the TSMC stock has soared over 70%.

Taiwan Semiconductor Manufacturing Co. (TSMC) reported a 39.1% year-on-year increase in third-quarter profit, surpassing analyst estimates and setting a fresh record as global demand for artificial intelligence chips remained strong.

The company also raised its full-year revenue guidance for 2025, citing continued robust demand for AI products.

TSMC posted revenue of NT$989.92 billion ($33.10 billion), ahead of the expected NT$977.46 billion, while net income reached NT$452.3 billion ($14.76 billion), surpassing the forecast of NT$417.69 billion.

Revenue rose 30.3% from a year earlier, and net income increased 13.7% from the previous quarter, which had itself marked a record high.

AI drives growth and strategic outlook

CEO CC Wei highlighted strong signals from clients requesting additional capacity to support AI workloads.

“AI demand actually continues to be very strong — stronger than we thought three months ago,” he said on an earnings call.

Wei added that rising adoption of AI models by consumers is fueling demand for compute, and by extension, semiconductor products, reinforcing TSMC’s confidence in the “AI megatrend.”

Reflecting this optimism, the company raised its 2025 revenue growth forecast to the mid-30% range, up from an earlier projection of around 30%.

TSMC also maintained its forecast for capital spending at up to $42 billion for 2025.

Advanced chips lead sales

TSMC’s high-performance computing division, which includes AI and 5G applications, contributed 57% of revenue in the September quarter.

Advanced chips with sizes of 7-nanometer or smaller accounted for 74% of wafer revenue, demonstrating the company’s focus on cutting-edge semiconductor technologies.

Smaller nanometer sizes enable greater processing power and efficiency, which are critical for AI workloads.

TSMC executives acknowledged potential risks from US tariff policies.

“We understand there are uncertainties and risks from the potential impact of tariff policies, especially in consumer-related and price-sensitive market segments,” Wei said.

The company has been investing heavily in US facilities, a strategy that may help mitigate tariff exposure.

Shares of TSMC in Taiwan have gained over 38% year-to-date, reflecting strong investor confidence in the company’s AI-driven growth trajectory.

With the combination of record earnings, upgraded revenue guidance, and ongoing strategic investments, TSMC continues to consolidate its position as a global leader in advanced semiconductor manufacturing.

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