Supported by the strong AI boom, TSM.US (TSM.US) is expected to achieve record profits for six consecutive quarters, with early pricing in the options market and earnings fluctuations of nearly 4%

The Zhitong Finance App learned that TSM.US (TSM.US), the world's largest advanced process foundry, will release its third quarter earnings report on Thursday. The market generally expects that the company's net profit will increase 65% year on year, setting a record profit high for the sixth consecutive quarter. Analysts said that behind this strong performance is the technology industry's continued high infrastructure capital expenditure, as well as strong market demand for its AI chip production capacity and advanced packaging technology CowOS.

According to 16 analysts' predictions compiled by LSEG SmartTest, TSMC's net profit for the third quarter is expected to rise to NT$746.3 billion (approximately US$23.4 billion. SmartTest gives greater weight to analysts with more accurate historical predictions). Any performance above NT$706.56 billion will set TSMC's record for single-quarter net profit in history and mark the eleventh consecutive quarter of profit growth.

As a core supplier of Nvidia (NVDA.US) and Apple (AAPL.US), the company with the highest market capitalization in Asia has reached about 2 trillion US dollars, almost double that of South Korean rival Samsung Electronics. Last week, TSMC announced a 50% year-on-year increase in revenue for the third quarter, exceeding market expectations and reaching a new high, further consolidating the judgment that AI demand continues to drive semiconductor sales.

J.P. Morgan analyst Gokul Hariharan's team pointed out in a recent research report that market demand is expected to continue to grow until 2028, and TSMC's revenue for that year is expected to increase 30% year over year.

Citigroup analyst Laura Chen's team predicts that TSMC's AI-related revenue scale may nearly double in 2027, and leading customers such as Nvidia and AMD (AMD.US) expect business growth to accelerate further.

The earnings conference call is scheduled to be held at 2 p.m. Beijing time (6 p.m. GMT). At that time, the company will give the latest guidance for the fourth quarter and the whole year. The conference received a lot of attention from investors — as the market feared that the Fed's interest rate hike could dampen the performance of AI concept stocks that are sensitive to borrowing costs. Affected by this sentiment, TSMC shares listed in Taipei, China fell 2% in early trading on Thursday, and the Taiwanese weighted index also fell about 3%.

In terms of capacity expansion, TSMC is investing 265 billion US dollars to build a fab in Arizona, USA, including an additional $100 billion announced in July. In September, there were reports that TSMC was evaluating potential investment in Texas; Tesla (TSLA.US) CEO Musk also said last week that his company will build and operate a TeraFabai chip complex in Texas, and TSMC may sublease part of its production capacity.

TSMC raised its capital expenditure forecast for this year from the previous high-end range of 52 billion to 56 billion US dollars to 60 billion US dollars to 64 billion US dollars at the July earnings conference. ASML.US (ASML.US), the world's largest semiconductor equipment manufacturer, said on Wednesday that customers are already negotiating orders from 2029 to 2030, which to a certain extent mitigates market concerns about the weakening momentum of the AI investment boom.

A team of analysts led by Russ Mold, investment director of investment agency AJ Bell, wrote in the research report: “With cutting-edge chip manufacturing capabilities, TSMC is one of the core supporters of the AI revolution. If the company confirms plans to expand production, it will send a signal that the industry's growth has yet to peak.”

Since this year, shares listed by TSMC in Taipei, China have accumulated a 57% increase, which is roughly equivalent to the 62% increase in the Taiwan Weighted Index.

After the options market hinted at performance, expectations fluctuated by nearly 4% and $500 became a bullish “pressure wall”

Prior to the implementation of the financial report, options traders had priced a fluctuation of about 4% for TSMC's post-earnings report, with a corresponding fluctuation range of about $16.60 per share.

On Wednesday, the semiconductor weather vane closed down 3.4% to $430, and the stock price just hung above the $430 exercise price due on October 16. Based on the flat cross-option pricing at this price, the bullish and bearish premium totals around $16.60. Based on this, the derivatives market expects the stock price to run between the lower support of $412.46 and the upward pressure of $445.66 during the week.

Judging from the options position structure, the exercise price of $430 has become a contentious place for long and short positions due this week. At this price, there are 7,633 open call option contracts and 6010 put options. Below this central price level, institutional investors have built a multi-level defensive layout: the first main line of defense is the bearish exercise price of 420 US dollars, with 8,771 open positions and 1,739 transactions on the same day; the lower exercise price of 410 US dollars holds 3,595 bearish contracts, while the integer mark of 400 US dollars anchors 7065 open positions.

More in-depth off-price put options revealed a large number of structured hedging positions set up to hedge against macroeconomic shocks or the overall pullback in technology stocks — 8109 exercise positions at $360, 7,242 positions at $300, and 7,459 positions at $280. The largest put option holding cluster in the market is concentrated at an exercise price of $270, with 10,397 outstanding contracts. At the same time, the range of bearish options above the current stock price is also impressive. The exercise price of 440 US dollars holds 6036 shares and 4,838 shares at 450 US dollars.

The upward direction also faced heavy resistance from bullish options. Since the equilibrium price rose, the exercise price of $440 was bullish on 4,468 open positions, followed by a massive concentrated position of $450 — 9505 unclosed contracts, with 4781 trades on Wednesday; $460 (5,700) and $470 (6,718 lots traded on the same day) constituted secondary resistance.

The upward ceiling of the current cycle's power chain ended at the psychological threshold of 500 US dollars. This price had the largest single bullish position in the entire market, with 10,496 unclosed contracts; at the far end, 520 US dollars and 540 exercise prices held 2,681 and 2,648 bullish contracts, respectively.