Shares of Taiwan Semiconductor Manufacturing (NYSE:TSM) rose about 2% premarket on Thursday after the global foundry raised its forecast for 2025 revenue growth to the mid-30% range after reporting third quarter results that beat estimates.
TSM — which produces chips for some of the world’s largest tech companies, including Apple (AAPL), Nvidia (NVDA) and AMD (AMD) — saw third quarter 2025 net revenue grow 40.8% year-over-year to $33.10B (NT$989.92B, +30.3%Y/Y). The company’s net income attributable to shareholders of the company jumped 39.1% year-over-year to NT$452.30B. Both top and bottom line numbers beat estimates.
“Our business in the third quarter was supported by strong demand for our leading-edge process technologies,” said Wendell Huang, Senior VP and CFO, TSM.
“Conviction in the AI megatrend is strengthening,” said TSM CEO C.C. Wei told analysts after outlining earnings, Bloomberg News reported. “The AI demand actually continues to be very strong, stronger than we thought three months ago.”
Outlook
For the fourth quarter, TSM expects revenue to be between $32.2B and $33.4B (midpoint $32.8B), which is more than the consensus estimate of $31.35B.
“Moving into fourth quarter 2025, we expect our business to be supported by continued strong demand for our leading-edge process technologies,” said Huang.
For the full year, TSM increased its revenue growth forecast to the mid-30% range, Bloomberg News reported. During the second quarter results, the company forecast sales growth of about 30% in U.S. dollar terms.
TSM said it expects robust AI demand to continue and maintained its forecast for capital spending at up to $42B for 2025, although it warned about a potential business impact from U.S. trade tariffs and currency moves, Reuters reported.
SA Analyst Commentary
“I see that TSM has just reported for its Q3, beating on the top line by almost 5%. The bottom line beat was even more impressive, about 12.3% If I’m seeing it correctly, TSM has just delivered the strongest double-beating since at least late 2021, and it followed after some negative quarterly EPS and revenue revisions made by Wall Street analysts ahead of the Q3 print. So it tells me that despite the rise in TSM stock price by over 54% on a YTD basis, the Street held a relatively pessimistic view on its prospects initially, and this pessimism helped the firm beat the consensus massively,” said Seeking Alpha analyst Oakoff Investments, Investing Group Leader for Beyond the Wall Investing.
Oakoff Investments added that “with likely more positive revisions now being around the corner, TSM should adjust higher on this Q3 catalyst as its forward valuation multiples allow it to do so, still. TSM is priced for ~1.3x FWD PEG, while most peers trade above 1.5-1.7x, giving a nice repricing opportunity for TSM, in my opinion.”
Q3 Revenue by Technology
TSM said 3nm process technology contributed 23% of total wafer revenue in the third-quarter, versus 20% in the year ago period, and 24% in the second quarter of 2025.
The 5nm process technology accounted for 37% of total wafer revenue, compared to 32% in the same period a year ago, and 36% in the second quarter of 2025. Meanwhile, 7nm accounted for 14% of total wafer revenue in the third quarter versus 17% a year earlier, and 14% in the second quarter of 2025.
Q3 Revenue by Geography
Revenue from China accounted for 8% of the total net revenue in the third quarter of 2025, compared to 11% in the year-ago period.
North America accounted for 76% of total net revenue, compared to 71% a year earlier, and 75% in the second quarter of 2025.
Q3 Revenue by Platform
High Performance Computing represented 57% of net revenue, up from 51% in the third quarter of 2024. The company’s smartphone segment represented 30% of net revenue in the third quarter of 2025, versus 34% in the year ago period.