Why October 15 Could Change Everything for Taiwan Semiconductor Stock
TSMC has trailed the broader chip rally by more than 30 percentage points this year, but its latest revenue figures tell a completely different story about where the business is actually headed.
Taiwan Semiconductor Manufacturing (NYSE:TSM | TSM Price Prediction) reports earnings on October 15, and Wall Street may be underestimating just how powerful its AI-driven growth has become. Despite soaring demand for advanced chips, TSMC has lagged the broader semiconductor rally as investors worry about shrinking margins. With September revenue climbing 54.6% year over year, the world’s leading chip foundry could be setting up for another earnings surprise.
TSMC Is Lagging the AI Boom. That Could Change October 15.
Taiwan Semiconductor has gained 49.59% year-to-date. The stock has had a solid run, but it lags behind the iShares Semiconductor ETF (NASDAQ:SOXX), which is up 82.4% over the same stretch. TSMC trails the chip index by 32.81 percentage points, and the stock slipped 4.58% over the past week.
The main reason for the gap is profitability. Management guided for third-quarter gross margin to 65%-67%, below the 67.7% it posted in Q2. The company expects the sharp 2nm ramp to dilute gross margin by about 3-4 percentage points, and overseas fabs add more pressure.
Investors have largely overlooked the demand data TSMC has already released. September revenue reached $16.03 billion, up 54.6% year over year. With earnings on October 15, 2026 nearing, the setup is in place for TSMC to change the conversation.
TSMC’s Leading-Edge AI Demand Could Crush Estimates
The prediction: TSMC tops the $4.46 consensus EPS estimate and reports revenue above the high end of its own guidance.
Management guided Q3 revenue to $44.6B-$45.8B. At the midpoint, that is a 12% sequential increase and a 37% year-over-year increase. September’s 54.6% growth ran well ahead of that pace, and nine-month revenue totaled $122.12 billion, up 41.1%.
Additionally, the revenue mix continues to improve. High-performance computing rose 20% quarter over quarter in Q2 and made up 66% of revenue. Nodes at 7nm and below produced 77% of wafer revenue. 2nm reached 3% in its first ramp quarter. Management said, “The AI megatrend continues to drive the need for more and more computation, which supports the robust demand for leading-edge silicon.”
TSMC also has a record of beating estimates. Q2 EPS of $4.31 topped the $3.89 estimate by 10.89%, and Q4 2025 beat by 5.52%. The company raised full-year revenue growth guidance to slightly above 40% from close to 30%. Over the past 30 days, analysts made 9 up revisions to full-year EPS estimates and 0 down revisions. Prediction-market participants assign a 41.5% probability to a Q3 gross margin of 67-68%, above the top of guidance.
Looking further out, consensus EPS rises from $16.93 in 2026 to $21.93 in 2027. That is 29.47% growth, well ahead of TSMC’s long-term revenue CAGR target of about 25%. These demand trends give the earnings report on Thursday a clear path to a beat.
Wall Street Sees 23% Upside for Taiwan Semiconductor
TSMC trades at 21x forward earnings, below its trailing multiple of 33x. Its PEG ratio of 0.89 sits below 1, which implies the stock could be undervalued. Net income rose 77.4% year over year last quarter, and return on equity stands at 40%.
Analysts’ consensus 12-month price target is $555.01, which is 23.03% above the current price of $451.11. Of 21 covering analysts, 20 rate the stock a Buy or Strong Buy, or 95.24%, and none rate it a Sell.
Keep in mind that the stock fell 2.77% the day after its Q2 beat, so a strong quarter doesn’t guarantee an immediate gain. Still, TSMC trails behind its broader sector, its monthly sales data already point to a strong quarter, and the October 15 Q3 earnings report is the catalyst.
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Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 500 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.
Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.
Outside of work, Thomas enjoys weight lifting and soccer.
