Taiwan Semiconductor Manufacturing Company (TSMC) Delivers Record Q3 Growth, Driven by AI Demand and Advanced Process Technologies

TSMC's Q3 revenue surged 40.8% YoY to $33.1 billion, driven by robust orders for its 3-nanometer and 5-nanometer process technologies. The company's stock has risen 52% YTD but is down 3.6% from its 52-week high. CEO C.C. Wei stated that AI-related demand will remain the primary growth driver through 2025 and beyond.

Taiwan Semiconductor Manufacturing Company (TSMC) reported a strong third quarter (Q3) 2025, with revenue surging 40.8% year-over-year (YoY) to $33.1 billion, according to Electronics Weekly. The company's net income also increased by 39.1% to $14.76 billion Electronics Weekly.

The growth was primarily driven by robust orders for the company's leading-edge process technologies, with 3-nanometer (N3) and 5-nanometer (N5) accounting for 23% and 37% of total wafer revenue, respectively. Advanced technologies, including 7-nanometer and more advanced nodes, accounted for 74% of total wafer revenue, as reported by Electronics Weekly.

TSMC's stock has risen 52% year-to-date (YTD) but is down 3.6% from its 52-week high of $311.37. CEO C.C. Wei stated that AI-related demand will remain the primary growth driver through 2025 and beyond. He noted that the explosive growth in token volume demonstrated increasing consumer AI model adoption, which means more and more computation is needed, driving increased demand for TSMC's most advanced nodes, according to a Barchart article Barchart.

The company's gross margin for the quarter was 59.5%, operating margin was 50.6%, and net profit margin was 45.7%. TSMC expects revenue between $32.2 billion and $33.4 billion for the fourth quarter 2025, with gross margins of 59% to 61%, per Electronics Weekly.

The AI chip stocks, including Nvidia (NVDA) and Intel (INTC), got a bump higher after TSMC's earnings report, with Nvidia rising 1.2% and Marvell Technology (MRVL) gaining 1.3%, according to Watcher.guru Watcher.guru. TSMC's strong results showed the strength of AI chip demand, which is currently driving semiconductor growth.

Looking ahead, TSMC is accelerating its global manufacturing plan to satisfy rising AI and semiconductor demand. The company is expediting the ramp-up of its Arizona fabs and considering further land acquisitions to create a full gigafab cluster for AI and smartphone chips, a point also highlighted in the Barchart article.

Wall Street remains strongly bullish on TSMC stock, with nine out of 12 analysts rating it a "Strong Buy," according to the same Barchart analysis. The stock has surpassed its average price target of $298.38, but its high target price of $400 implies potential upside of 33.4% in the next 12 months.