TSMC Q3 Earnings: Nicholas Mugalli Says Capex Hint Matters Most As Chipmaker Eyes Sixth Record Profit

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) is poised to extend its record profit streak to six quarters Thursday, with investors also watching for any hint of how much more it will spend on artificial intelligence chip capacity in 2027.

Profit Set to Top Record

An LSEG SmartEstimate compiled from 16 analysts, according to Reuters, puts third-quarter net income at TWD 746.3 billion ($23.10 billion), up 65% from TWD 452.3 billion ($14 billion) a year earlier.

Any profit above the second-quarter record of TWD 706.56 billion ($21.87 billion), which rose 77.4% year over year, would extend the streak.

TSMC reported TWD 1.49 trillion ($46.11 billion) in third-quarter revenue last week, up 50% year over year and above the TWD 1.46 trillion ($45.18 billion) analysts expected.

Capex Is the Number to Watch

TSMC raised its 2026 capital spending budget in July to $60 billion to $64 billion from $52 billion to $56 billion.

Nicholas Mugalli, CEO and principal of World Trade Securities, said in a Substack post that “capex is the number that matters the most.”

TSMC usually saves that number for January, he added, but he would not be surprised by a hint on Thursday’s call, scheduled for 2 AM ET.

Pricing Power Backs Profit

Mugalli sees an AI chip cycle limited by supply.

“The constraint isn’t demand. It’s how fast TSMC, and the companies that sell it tools, can build,” he added.

TSMC is reportedly planning to raise wafer prices 3% to 6% from January 2027, with steeper increases for its most advanced processes, according to DigiTimes.

Broadcom Inc. (NASDAQ:AVGO) CEO Hock Tan said Monday that access to capital could become a bigger obstacle for AI than chip or power shortages, while Intel Corp. (NASDAQ:INTC) CEO Lip-Bu Tan flagged rising financing costs and uncertainty over investment returns.

Price Action: New York-listed shares of TSMC fell 3.40% on Wednesday to close at $430 and fell 1.73% in after-hours trading.

Taipei-listed shares fell 2.01% to TWD $2,440 ($75.51) on Thursday, while the benchmark Taiex dropped 3.25% in an Asian chip selloff tied to AI funding worries.

Benzinga Edge rankings indicate TSMC’s NYSE-listed stock has a Momentum score in the 87th percentile and a Growth score in the 85th percentile.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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