Taiwan Semiconductor Manufacturing Company (TSMC) reported strong third-quarter results on Thursday, October 15, 2026, highlighting robust demand for AI chips. The company's revenue reached $46.7 billion, surpassing its earlier forecast of $44.6 billion to $45.8 billion. TSMC's chairman and CEO, C.C. Wei, noted that demand for AI chips remains far above the company's current supply capacity. This demand is driving significant growth in TSMC's high-performance computing segment, which includes AI chips, up 22% sequentially from the second quarter.
TSMC's revenue from high-performance computing now accounts for 68% of its total revenue, up from 57% in the third quarter of 2025. The company expects its 2026 revenue to rise around 44% in U.S. dollars, up from a previous forecast of a little over 40%. Wei emphasized that there are no signs of a slowdown in AI chip demand, suggesting that the growth rate might even be higher than anticipated.
Nvidia (NASDAQ:NVDA), a major customer of TSMC, saw its shares drop around 9% from their record close on October 6, 2026, ending at $217.23 on October 15. Despite this decline, Nvidia's stock is trading at a lower price-to-earnings ratio compared to TSMC. Analysts expect Nvidia's earnings per share for the next fiscal year to be around 14 times its current share price, making it a potentially attractive investment given the strong demand for AI chips.
TSMC's fourth-quarter revenue guidance of $52.3 billion to $54.3 billion indicates continued strong growth. The company's capital expenditures of around $40.6 billion through the first three quarters of 2026 suggest efforts to expand production capacity. However, the market's skepticism about Nvidia's ability to sustain its growth is evident in the stock's recent decline. Investors are advised to consider the volatility and risk associated with Nvidia's stock before making investment decisions.