--- title: "Taiwan Semiconductor (TSM) Q3 2026: Revenue Rose, Margins Eased From a Peak" canonical_url: https://www.stockexpertai.com/journal/2026-11-10/taiwan-semiconductor-tsm-q3-2026-revenue-rose-margins-eased-from-a-peak-710588ce9aab last_updated: 2026-11-11T04:02:46.320Z section: "AI Signals" author: "Stock Expert AI Research" publisher: Stock Expert AI tickers: TSM content_type: journal-article --- # Taiwan Semiconductor (TSM) Q3 2026: Revenue Rose, Margins Eased From a Peak _TSMC's third-quarter net income rose 68.6% from a year earlier and free cash flow jumped, while gross margin slipped from the prior quarter's high._ ![Data cover: Taiwan Semiconductor (TSM) Q3 2026: Revenue Rose, Margins Eased From a Peak](/public-objects/streetnews/2026-11-10/AI_SIGNALS-cover-e726560d.jpg) Stock Expert AI data cover: figures from Financial Modeling Prep; background is an illustrative public-domain photo, credited on the image. Revenue kept climbing at Taiwan Semiconductor Manufacturing Company (TSM) in the third quarter ended Sept. 30, 2026, with net income of TWD 762.65B, up 68.6% from the year-ago quarter. Gross margin, the share of revenue left after production costs, was 66.4%, lower than the prior quarter. Figures are current as of Nov. 10, 2026, unless stated otherwise. ## Key facts - **Earnings date:** TSMC's results were filed Oct. 15, 2026. Earnings per US-listed share were 4.6 USD against an analyst estimate of 4.45 USD, a difference of +$0.15, or 3.4%. - **Revenue:** $46.06B for the third quarter ended Sept. 30, 2026, against an analyst estimate of $45.67B, a difference of +$392.5M, or 0.9%. In local currency, revenue was TWD 1.49T, up 50.9% from the year-ago quarter. - **Profit:** operating income was TWD 875.46B and diluted EPS was 147.15 TWD, against 87.2 TWD in the year-ago quarter. These local-currency figures are per ordinary share and are not comparable with the USD per-share figure above. - **Share price:** TSM traded at 396.48 USD on the latest quote (Nov. 10, 2026), up 2.02%. The 52-week range is 266.82-487.47 USD. - **Next report:** expected Jan. 21, 2027, with an EPS estimate of 5.1 USD and a revenue estimate of $52.77B. ## What happened TSMC makes chips designed by other companies. Its third-quarter results beat the analyst estimates on both earnings and revenue, though by small margins. The larger story is in the trend: revenue rose in each quarter of the five-quarter period shown, but margins did not rise with them. | 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 | Gross margin climbed for three straight quarters, then eased in the latest one. Operating margin, which also counts research and administrative costs, followed the same path. Net income still rose because revenue grew faster than margins fell. Our data does not include a management explanation for the margin change, so we do not offer one. Cash flow changed more sharply. Operating cash flow, the cash the business generates from its normal work, was TWD 951.76B in the third quarter, up from TWD 783.36B in the second quarter. Capital spending was TWD 441.63B, lower than the TWD 498.95B of the second quarter. Free cash flow, which is operating cash flow minus capital spending, was TWD 510.13B, against TWD 284.42B in the second quarter and TWD 138.40B a year earlier. TSMC paid dividends of TWD 155.11B in the quarter. Buybacks were zero in each of the last five quarters. ## Why it matters for investors **The balance sheet is a strength.** FMP lists net debt of TWD -2.63T as of Sept. 30, 2026. A negative figure means the company holds more cash than debt. Separately, cash and short-term investments were TWD 4.01T, total debt was TWD 981.30B, and shareholders' equity was TWD 6.98T. Debt/equity is 0.14. The Piotroski score, a nine-point check of financial health, is 8, and the Altman Z-score, a bankruptcy-risk gauge where higher is safer, is 15.97. **Valuation versus peers.** TSM trades at a trailing P/E of 24.07, meaning the price is 24.07 times the past year's earnings. Its price/sales is 12.40, EV/EBITDA is 16.00, price/free cash flow is 40.83, and net margin is 51.5%. The dividend yield is 1.0%. Peers look different: | Company | Market cap | P/E | Net margin | |---|---|---|---| | United Microelectronics (UMC) | $37.52B | 15.05 | 31.9% | | Tower Semiconductor (TSEM) | $16.76B | 48.15 | 19.4% | | Hua Hong Semiconductor (HHUSF) | $14.60B | 86.47 | 6.6% | | Intel (INTC) | $308.96B | -24.42 | -20.1% | TSMC's net margin is higher than each of these peers. Its P/E is higher than UMC's and lower than TSEM's and HHUSF's. Intel's negative P/E reflects losses over the past year. **What analysts say.** Of 25 ratings tracked by FMP, 18 are buy, 7 are hold and none are sell; the consensus is Buy. Analyst price targets average 585.57 USD, with a median of 560.00 USD, a high of 700.00 USD and a low of 500.00 USD. All of these are above the latest quote of 396.48 USD. Recent actions include Bernstein maintaining Outperform on Nov. 4, 2026, and Barclays, DA Davidson and Needham maintaining positive ratings on Oct. 15 and Oct. 16, 2026. For the period ending June 30, 2028, analysts estimate revenue of TWD 2.24T and EPS of 217.73 TWD, based on five analysts. **Insiders.** Among the 30 most recent Form 4 filings, those dated in the last 90 days show 30 open-market purchases and no sales. FMP notes that older filings in the window may be missing. **Our MoonshotScore.** Stock Expert AI's MoonshotScore V2 for TSM is 93.5, rated Exceptional. The pillars are uneven. Quality is 94 and safety is 94, growth is 88, and momentum is 75. Valuation is 39, the weakest pillar, relative to its sector. ## What could go wrong. - The margin dip from the second quarter is a reminder that profitability does not rise in a straight line. - Capital spending remains very large, and free cash flow swung widely from quarter to quarter. - FMP's discounted cash flow model, an estimate of what future cash flows are worth today, gives 124.27 USD per share, far below the latest quote. Such models depend on their assumptions, but the gap shows how much of the price rests on continued growth. - The stock has been volatile, with a 52-week range of 266.82-487.47 USD. - On Nov. 10, 2026, a Motley Fool article described TSMC as sitting at the center of an AI boom. Analyst estimates for later quarters assume that demand continues. ## What to watch next - **Jan. 21, 2027:** the next earnings date, with an EPS estimate of 5.1 USD and a revenue estimate of $52.77B. - **Gross margin:** whether it returns toward the second-quarter level or keeps easing. - **Free cash flow:** whether the third-quarter level holds as capital spending changes. - **Valuation:** whether earnings growth keeps pace with the share price, given the weak valuation pillar. ## Frequently asked questions ## Q: Did Taiwan Semiconductor beat earnings estimates in the third quarter of 2026? Yes. For the quarter ended Sept. 30, 2026, TSMC's EPS was 4.6 USD against an analyst estimate of 4.45 USD, a difference of +$0.15, or 3.4%. Revenue was $46.06B against an estimate of $45.67B, a difference of +$392.5M, or 0.9%. ## Q: Is TSMC's profit margin getting better or worse? It is above a year ago but below the prior quarter. TSMC's gross margin was 66.4% in the third quarter ended Sept. 30, 2026, against 59.5% in the year-ago quarter. Its second-quarter gross margin of 67.7% was the five-quarter high. ## Q: What do analysts expect for TSM stock? Analysts tracked by FMP have a consensus rating of Buy, with 18 buy ratings, 7 holds and no sells. Their average price target is 585.57 USD, with targets ranging from 500.00 USD to 700.00 USD. TSM traded at 396.48 USD on the latest quote (Nov. 10, 2026). These are analyst views, not a recommendation from Stock Expert AI. ## What our data could not verify We had no company release or earnings-call transcript for this piece, so we cannot report management's own explanation for the margin change, capital spending plans or guidance. Share prices are latest quotes, not closing prices. **Sources:** Stock Expert AI data (FMP financial statements, estimates, price targets, MoonshotScore). Third-party report: a Motley Fool article, used for context only. *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) - [seekingalpha.com: Baron Global Durable Advantage ETF Q3 2026 Top Contributors And Detractors](https://seekingalpha.com/article/4966190-baron-global-durable-advantage-etf-q3-2026-top-contributors-and-detractors) - [youtube.com: Tuesday's Final Takeaways: TSM Sales Jump 60% Y/Y, U.S. Sees Gas Pump Relief](https://www.youtube.com/watch?v=JPMJUewPpOw) - [zacks.com: NVIDIA Governance Woes: 3 Areas to Buy From Amid AI Market Slump](https://www.zacks.com/stock/news/3027395/nvidia-governance-woes-3-areas-to-buy-from-amid-ai-market-slump?cid=CS-STOCKNEWSAPI-FT-analyst_blog|industry_focus-3027395) - [fool.com: TSMC Is at the Center of an AI Boom That Flipped 25 Years of U.S. Trade. Is the Stock a Buy?](https://www.fool.com/investing/2026/11/10/tsmc-is-at-the-center-of-an-ai-boom-that-flipped-25-years-of-u-s-trade-is-the-stock-a-buy/) --- _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._