TSMC Stock Surges as AI Boom Pushes Q3 Revenue Above Forecasts

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, reported a sharp rise in third-quarter revenue, driven by surging demand for artificial intelligence processors. The company’s unaudited revenue for the quarter reached NT$989.92 billion (US$32.47 billion), marking a 30 percent year-on-year increase and surpassing market expectations. 

This performance, supported by global investment in AI infrastructure, reinforces TSMC’s central role in supplying advanced chips that power data centers, graphics processors, and generative AI systems.

TSMC’s results underline how the AI boom continues to reshape the semiconductor sector, where demand for high-performance chips offsets declines in traditional markets such as smartphones and consumer electronics. Analysts believe this momentum could sustain growth well into 2025 as companies like Nvidia and AMD expand their AI portfolios.

Quarter in numbers:

The company’s Q3 revenue outperformed both its own guidance and market forecasts. Analysts had expected TSMC to post about NT$973 billion, but actual figures came in higher, within the company’s earlier range of US$31.8 billion to US$33.0 billion, according to Reuters. The strong quarterly gain followed a solid first half of 2025, when TSMC saw consistent demand for 3-nanometer and 5-nanometer chips used in advanced processors.

Revenue growth was primarily supported by orders from leading AI chip designers, particularly Nvidia and AMD, whose data center and accelerator chips rely heavily on TSMC’s advanced fabrication technologies. While the company has yet to release full profit details, analysts expect its gross margin to remain above 53 percent, reflecting higher pricing and utilization in premium chip nodes.

AI boom as growth engine: how TSMC is benefiting

The explosion of interest in generative AI models and data center infrastructure has sharply increased the demand for high-end semiconductors. TSMC remains the exclusive manufacturer for many of the world’s most powerful AI chips, positioning it as the key enabler of the ongoing computing wave. 

Companies such as Nvidia, AMD, and Apple continue to secure production capacity for 3-nanometer and upcoming 2-nanometer nodes to meet growing AI workloads, as reported by Proactive Investors.

The foundry’s technological edge and economies of scale have allowed it to capture a dominant share of advanced chip production globally. As TECHi coverage of AMD’s raised price target highlights, AI partnerships and computing demand are pushing chip designers to expand rapidly, directly benefiting suppliers like TSMC. 

Despite softer sales in smartphones and automotive chips, the strength of AI orders has compensated, keeping TSMC’s capacity tight and pricing stable.

Market reaction and risks

Investors responded positively to TSMC’s results, with its Taipei-listed shares gaining more than 34 percent year-to-date, outpacing the 18.5 percent rise in the broader market. Analysts view the company as one of the clearest beneficiaries of the global shift toward AI computing, with several brokerages reaffirming “buy” ratings following the announcement, according to Barron’s.

However, TSMC’s path forward is not without challenges. The firm faces increasing geopolitical risk amid ongoing U.S.–China tensions, potential supply disruptions, and continued export restrictions on advanced chip technology. 

Rising costs from material inflation and global facility expansions also weigh on profitability. Nonetheless, management remains confident about medium-term prospects, with full quarterly results and detailed guidance scheduled for release on October 16.

The broader chip industry is witnessing similar optimism. TECHi report on Intel’s foundry expansion underscores how traditional players are investing aggressively to capture a share of the AI-driven manufacturing wave, setting up a competitive landscape that could define the next decade.

Conclusion

TSMC’s forecast-beating quarter is a clear signal that AI demand has moved beyond short-term hype. The company’s continued success highlights the structural transformation underway in the semiconductor sector, where computing power, energy efficiency, and fabrication precision now define market leadership.

Looking ahead, investors and analysts will be watching for TSMC’s progress on its 2-nanometer roadmap, new capacity in the United States and Japan, and sustained AI chip orders from key clients. The foundry’s performance will also serve as a barometer for global tech investment sentiment, as spending on AI servers and advanced packaging grows.

In a rapidly shifting market, TSMC’s Q3 results demonstrate that the center of gravity in technology has shifted firmly toward AI-driven computing. For now, the world’s top chipmaker continues to set the pace for the semiconductor industry, shaping the digital foundation of the next era of innovation.