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Earning Preview :Taiwan Semiconductor Manufacturing: Revenue Seen Rising 23.30% This Quarter; Institutions Lean Bullish on AI-Driven Upside

Earnings Agent

$Taiwan Semiconductor Manufacturing(TSM)$  

10:08

Abstract

Taiwan Semiconductor Manufacturing will report quarterly results on January 15, 2026 after market close; this preview compiles the latest financials, management outlook, and prevailing Street views to frame expectations and identify the key swing factors for revenue, margins, and earnings.

Market Forecast

For the current quarter, the company’s revenue is forecast at $32.59 billion, up 23.30% year over year, with EBIT of $16.36 billion implying continued operating leverage; consensus expects adjusted EPS of $2.47, up 11.03% year over year. Forecast details for gross profit margin and net margin were not disclosed in the preview dataset, though prior-quarter profitability trends suggest resilient conversion from revenue to earnings. The company’s main business remains wafer fabrication, with management emphasis on advanced nodes and AI-related demand supporting a constructive outlook. The most promising segment is advanced wafer processes tied to AI accelerators and high-performance computing, where revenue momentum and year-over-year growth materially outpace legacy nodes; revenue stood at $860.96 billion (USD) last quarter with growth led by cutting-edge technologies.

Last Quarter Review

In the previous quarter, revenue was $33.10 billion, gross profit margin was 59.45%, GAAP net profit attributable to the parent company grew quarter over quarter by 13.57%, net profit margin was 45.69%, and adjusted EPS was $2.92, up 50.52% year over year. A notable highlight was a robust profitability mix as the company exceeded revenue and EPS estimates, underscoring operating efficiency and product mix improvement. The main business was wafer fabrication with revenue of $860.96 million last quarter, while other revenue was $128.96 million; strength concentrated in advanced technologies with outsized demand from AI and high-performance computing.

Current Quarter Outlook

Main business: Wafer fabrication and advanced nodes

Wafer fabrication remains the core revenue engine, with a sustained mix shift to leading-edge nodes that underpin both pricing and utilization. The forecast revenue of $32.59 billion and EBIT of $16.36 billion indicate that operating leverage can remain healthy if capacity remains tight in 3 nm and N4/N5 families, and if yields continue to improve. The prior quarter’s gross margin of 59.45% and net margin of 45.69% provide an advantageous starting point, suggesting that even with incremental depreciation from new capacity, blended profitability can remain resilient provided demand holds in AI accelerator and server CPU/GPU ramps. Seasonal smartphone volumes may be steadier than earlier cycles as flagship launches incorporate higher silicon content, but the more consequential driver is high-performance computing, where wafer starts are tracking above historical norms. With adjusted EPS expected at $2.47, management’s execution on cost and utilization will be pivotal to holding the margin line as mix evolves.

Most promising business: AI/HPC semiconductor demand

AI workloads continue to stimulate outsized demand for advanced logic and advanced packaging, with foundry customers scaling accelerator platforms to support cloud training and inference. This structure favors higher average selling prices and premium capacity allocation, which can mitigate cyclical softness in commodity logic. The last quarter’s earnings outperformance, together with a double-digit year-over-year revenue growth outlook for the current quarter, points to a continued tailwind from AI programs entering volume production. Upside risk centers on faster-than-expected pull-ins for next-generation accelerators and compute platforms, which could support utilization and margin expansion beyond baseline assumptions. Potential offsets include supply-chain bottlenecks in back-end packaging or substrate availability, which could gate upside if not fully alleviated.

Key stock price drivers this quarter

Investors will focus on the sustainability of advanced-node utilization and any commentary on capacity additions and lead times, as these shape margin visibility and capex phasing. The EBIT forecast of $16.36 billion against $32.59 billion of revenue implies leverage that will be tested by the pace of 3 nm and advanced packaging ramps; clarity on yield progress and cost-down roadmaps will influence earnings durability into the next quarter. Guidance sensitivity around AI/HPC versus smartphone mix is another swing factor, with stronger AI mix typically supporting margin and earnings power. Finally, any updates on customer roadmaps and node transitions could recalibrate medium-term growth expectations and valuation multiples.

Analyst Opinions

The balance of recent institutional commentary skews bullish, with a majority expecting upside anchored by AI-driven orders and stable advanced-node utilization; bearish views are in the minority and largely tied to concerns about cyclical normalization later in the year. Well-known institutions highlight continued momentum in AI accelerators and high-performance compute as key supports for revenue and margin, and they point to the prior quarter’s estimate beats and the current quarter’s double-digit year-over-year growth forecast as evidence of durable demand. The prevailing view emphasizes that any near-term volatility in legacy smartphone exposure is likely to be offset by stronger AI and server-related demand, with capacity discipline and mix improvements helping sustain earnings quality even as new nodes ramp.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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