--- title: "TSM Falls 5.74% With No Clear Catalyst, Two Weeks After Q3 Beat" canonical_url: https://www.stockexpertai.com/journal/2026-10-30/why-tsm-fell-5-74-on-oct-30-after-a-q3-beat-margins-dipped-cash-rose-ee58f9226ce0 last_updated: 2026-10-30T16:57:24.416Z section: "AI Signals" author: "Stock Expert AI Research" publisher: Stock Expert AI tickers: TSM content_type: journal-article --- # TSM Falls 5.74% With No Clear Catalyst, Two Weeks After Q3 Beat _TSMC's third-quarter margins eased from the prior quarter's high, while free cash flow rose and the stock traded at 407.02 USD on Oct. 30, 2026._ ![Data cover: TSM Falls 5.74% With No Clear Catalyst, Two Weeks After Q3 Beat](/public-objects/streetnews/2026-10-30/AI_SIGNALS-cover-19553846.jpg) Stock Expert AI data cover: figures from Financial Modeling Prep; background is an illustrative public-domain photo, credited on the image. Taiwan Semiconductor Manufacturing Company (TSM) fell 5.74% to 407.02 USD in the latest quote on Oct. 30, 2026, two weeks after it reported third-quarter results that beat Wall Street estimates. The company's profit margins slipped slightly from the second quarter's high, but free cash flow rose sharply, which gives investors a more mixed picture than the headline beat suggests. We did not find a company release or announcement tied to today's drop, so we do not attribute it to any single cause. *Figures are current as of Oct. 30, 2026 and cover the third quarter ended Sept. 30, 2026 (fiscal Q3 2026), unless stated otherwise. Financial statements are in Taiwan dollars (TWD). Share prices, price targets and the earnings-report EPS and revenue lines are in US dollars (USD) per US-listed share.* ## Key facts - **Oct. 15, 2026:** TSMC reported third-quarter earnings of 4.6 USD per US-listed share against an analyst estimate of 4.45 USD, a difference of +$0.15 (3.4%). Revenue was $46.06B against an estimate of $45.67B, a difference of +$392.5M (0.9%). - **Quarter ended Sept. 30, 2026:** Revenue was TWD 1.49T, up 50.9% from the year-ago quarter. Net income was TWD 762.65B, up 68.6%. Diluted EPS was 147.15 TWD, against 87.2 TWD a year earlier. - **Oct. 30, 2026:** The stock sat at 407.02 USD, inside a 52-week range of 266.82-487.47 USD. Market value is $2.11T. - **Next earnings date:** Jan. 21, 2027. Analysts expect EPS of 5.16 USD and revenue of $52.75B. - **Balance sheet, Sept. 30, 2026:** Cash and short-term investments were TWD 4.01T against total debt of TWD 981.30B, so the company holds more cash than debt. | Metric | Q3 FY2026 | Q3 FY2025 (year-ago) | |---|---|---| | Revenue | TWD 1.49T | TWD 989.92B | | Operating income | TWD 875.46B | TWD 500.69B | | Net income | TWD 762.65B | TWD 452.30B | | Diluted EPS | 147.15 TWD | 87.2 TWD | ## What happened TSMC is a contract chipmaker, meaning it manufactures chips designed by other companies. On Oct. 15, 2026 it reported third-quarter results that topped analyst estimates on both revenue and earnings. In the quarter ended Sept. 30, 2026, revenue and net income were both much higher than a year earlier, with net income growing faster than revenue. The more telling detail is the trend across recent quarters. Gross margin (the share of revenue left after the direct cost of making chips) and operating margin (the share left after all operating costs) climbed for three straight quarters, then eased in the latest one: | Quarter ended | Revenue (TWD) | Gross margin | Operating margin | Net income (TWD) | |---|---|---|---|---| | Sept. 30, 2025 | 989.92B | 59.5% | 50.6% | 452.30B | | Dec. 31, 2025 | 1.05T | 62.3% | 54.0% | 485.47B | | March 31, 2026 | 1.13T | 66.2% | 58.1% | 572.48B | | June 30, 2026 | 1.27T | 67.7% | 60.3% | 706.56B | | Sept. 30, 2026 | 1.49T | 66.4% | 58.6% | 762.65B | This table shows that revenue and net income kept rising while margins came off their second-quarter high. Margins remain far above where they stood a year earlier. We have no management commentary in our data for this period, so we cannot say what drove the dip. Cash flow moved the other way. Operating cash flow, the cash the business generates from its normal operations, was TWD 951.76B in the latest quarter, up from TWD 783.36B in the prior quarter. Capital spending, the money put into factories and equipment, was TWD 441.63B, lower than the prior quarter's TWD 498.95B. The result was free cash flow (operating cash flow minus capital spending) of TWD 510.13B, against TWD 284.42B in the quarter ended June 30, 2026 and TWD 138.40B a year earlier. Free cash flow can swing with the timing of equipment purchases, so one quarter does not set a trend. The company paid dividends of TWD 155.11B in the quarter and did not buy back shares in any of the last five quarters. ## Why it matters for investors **Valuation is the open question.** On a trailing-12-month basis, TSMC trades at a price-to-earnings (P/E) ratio of 24.12. P/E compares the share price with the past year's profit per share. Other valuation measures are a price-to-sales ratio of 12.43, an EV/EBITDA (a company-value-to-operating-profit measure) of 16.04, and a price-to-free-cash-flow ratio of 40.92. The dividend yield is 1.0%. Net margin, the share of revenue that becomes profit, is 51.5%. **Peers look very different.** Among related chip companies, United Microelectronics (UMC) has a P/E of 16.37 and a net margin of 31.9%. Tower Semiconductor (TSEM) has a P/E of 68.93 and a net margin of 16.9%. Hua Hong Semiconductor (HHUSF) has a P/E of 133.18 and a net margin of 3.8%. Intel (INTC) has a P/E of -27.10 because it lost money, with a net margin of -20.1%. TSMC combines the highest net margin in this group with a P/E below that of Tower and Hua Hong, though above UMC's. **Analysts remain positive.** Of 25 analyst ratings, 18 are Buy and 7 are Hold, with none rating it Sell; the consensus is "Buy." The average price target is 585.57 USD, the median is 560.00 USD, and targets run from a low of 500.00 USD to a high of 700.00 USD. These are analysts' views, not ours. Barclays, DA Davidson and Needham each reiterated positive ratings around the report (Oct. 15-16, 2026). Analysts also expect growth to continue: for the period ending March 30, 2028, the consensus revenue estimate is TWD 2.06T and EPS is 200.56 TWD (6 analysts). **Balance sheet and insiders.** The Piotroski score, a 0-9 gauge of financial health, is 8, and the Altman Z-score, a bankruptcy-risk gauge where higher is safer, is 17.33. Debt-to-equity is 0.14. Among the 30 most recent insider filings, those dated in the last 90 days showed 30 open-market purchases and no sales, though older filings in that window may be missing. **Our MoonshotScore.** Stock Expert AI's MoonshotScore V2 for TSM is 94.4 (Exceptional). Its sector-relative pillars are quality 94, safety 94, growth 89, momentum 80 and valuation 39. In plain terms, the business scores very well on profitability, balance-sheet strength and growth, while valuation is the weak pillar compared with other companies in its sector. ## What could go wrong - **Valuation cushion.** The valuation pillar is the weakest of the five. FMP's discounted cash flow (DCF) model, which estimates what future cash flows are worth today, gives a value of 127.99 USD per share, well below the current price. DCF models depend heavily on their assumptions, and this one is far from analyst targets, but it shows how much of the price rests on continued growth. - **Margins eased.** Margins fell in the latest quarter after three straight quarterly gains. If that continues, profit growth could lag revenue growth. - **Heavy spending.** Capital spending was large in every recent quarter, and free cash flow has varied widely from quarter to quarter. - **Expectations.** A beat of 0.9% on revenue is modest. With high growth already in estimates, a small miss could disappoint investors. - **Limited disclosure.** Our data contains no customer or end-market breakdown, and management's own risk statements were not available to us for this piece. ## What to watch next 1. **Jan. 21, 2027:** the next earnings report, with consensus EPS of 5.16 USD and revenue of $52.75B. 2. **Margins:** whether gross and operating margins stabilize or keep slipping from the June 30, 2026 quarter's levels. 3. **Free cash flow and capital spending:** whether cash generation holds as factory spending changes. 4. **Price range:** the stock is below its 52-week high of 487.47 USD and above its low of 266.82 USD. Watch whether today's move is a one-day event. 5. **Analyst changes:** any shift in the 18 Buy and 7 Hold ratings. ## Frequently asked questions ## Q: Why did TSM stock go down on Oct. 30, 2026? The stock was down 5.74% at 407.02 USD in the latest quote on Oct. 30, 2026, but we found no company announcement explaining it. The most recent company event in our data was the Oct. 15, 2026 earnings report, which beat estimates. We found no cause for the move in the available evidence. ## Q: Did TSMC beat earnings estimates in the third quarter of 2026? Yes. For the quarter ended Sept. 30, 2026, TSMC reported EPS of 4.6 USD per US-listed share against an estimate of 4.45 USD, and revenue of $46.06B against an estimate of $45.67B. Revenue in Taiwan dollars was TWD 1.49T, up 50.9% from a year earlier. ## Q: Is TSMC stock expensive compared with other chip companies? It depends on the measure. TSMC's trailing P/E of 24.12 is higher than UMC's 16.37 but lower than Tower Semiconductor's 68.93 and Hua Hong's 133.18. Its 51.5% net margin is the highest of the group. Our MoonshotScore gives it 39 on the valuation pillar, a weak area relative to its sector, while analysts' average price target is 585.57 USD. This is information, not advice. *Sources: Company financial data, valuation, MoonshotScore and analyst figures are from Stock Expert AI's market data (via Financial Modeling Prep) as of Oct. 30, 2026. Headlines from third-party outlets were used only for context, not for figures.* *This is educational content, not investment advice. Past performance does not guarantee future results.* ## Related Tickers - [TSM](https://www.stockexpertai.com/stock/tsm) ## Sources - [Stock Expert AI TSM page: quote, financials and MoonshotScore](https://www.stockexpertai.com/stock/tsm) - [fool.com: Here's What a $10,000 Investment in TSMC Stock Will Be Worth by 2030](https://www.fool.com/investing/2026/10/30/here-s-what-a-usd10-000-investment-in-tsmc-stock-will-be-worth-by-2030/) - [zacks.com: Taiwan Semiconductor Manufacturing Company Ltd. (TSM) is Attracting Investor Attention: Here is What You Should Know](https://www.zacks.com/stock/news/3019426/taiwan-semiconductor-manufacturing-company-ltd-tsm-is-attracting-investor-attention-here-is-what-you-should-know?cid=CS-STOCKNEWSAPI-FT-fundamental_analysis|most_searched_stocks-3019426) - [fool.com: Applied Materials vs. Taiwan Semiconductor Manufacturing: Comparing Revenue Growth Trends Between These Artificial Intelligence Companies](https://www.fool.com/coverage/charts/2026/10/30/applied-materials-vs-taiwan-semiconductor-manufacturing-comparing-revenue-growth-trends-between-these-artificial-intelligence-companies/) - [fool.com: 3 AI Stocks to Buy and Hold Through 2030](https://www.fool.com/investing/2026/10/29/3-ai-stocks-to-buy-and-hold-through-2030/) --- _Written by Stock Expert AI's research desk with AI assistance. Figures come from FMP data and the official sources cited in the article. Educational research, not financial advice._