TSMC is a core holding with a fantastic year; Q3 2026 revenue beat the high end of guidance at 46.7 billion, driven by advanced nodes and HPC at 68% of revenue. It is capacity constrained, spending 60-64 billion, and its two-year growth runway looks wide open, so its run is not over.

So we have a lot to cover in what was supposed to be a pretty quick update after Taiwan Semiconductor Manufacturing, TSMC, Q3 2026 earnings.

Taiwan Semi Manufacturing has had a fantastic year by all accounts, up 40% in the last 12 months, roughly up 30% year to date, at least, immediately after the report. For a company $2 trillion plus market cap, that is a pretty epic return.

It's a core holding. Not something that needs a lot of babysitting, so pretty fantastic. Can't argue with that.

And of course, the company does sit there at the bottom. The largest semiconductor manufacturer foundry business manufacturing the most advanced chips in the world. That category down at the bottom, the manufacturing layer, and a vast wielder of control over not just the supply chain in and around Taiwan, but all over the world, expanding in the US, in Japan, in Europe. Pretty great stuff.

And a couple of notes from Fiscal AI breaking down the quarterly earnings. Revenue growth exceeded the high end of guidance that they provided a few months ago, 46.7 billion, gross margin and operating margin at 66% and 58.7% respectively, driven by seven nanometer and below manufacturing nodes.

Nearly 80% of total wafer revenue from those most advanced processes. And of course, HPC, high-performance computing, data center, and other enterprise compute semiconductors used in data centers and other enterprise compute up 22% sequentially quarter over quarter and 68% of revenue, nearly 70% of revenue.

And then we did get that update already on their capital expenditure guidance now expected to be 60 to 64 billion this year alone.

Because of this massive growth in high-performance compute, it's different from smartphone revenue that helped put TSMC on the map last decade with Apple as its lead customer. There's a lot of advanced packaging going on at TSMC these days in support of that HPC revenue.

And so management talked about this on the earnings call. A big transition underway from simple chatbots and training large AI models for simple chatbots to now AI models used in agentic AI and assistants.

So a lot of demand being pulled in by their customers.

They're capacity constrained, and so they are still trying to catch up to demand. But doing so in a way that generates really, really positive returns on investment, returns on equity.

But they are going to be accelerating the opening of their second fab in Arizona. They're evaluating potentially expanding in Texas, another big semiconductor manufacturing hub.

And then there is that advanced packaging I just mentioned. They are the leader in high-end packaging and have an extensive partner network, including companies like GlobalFoundries, to help increase supply for advanced packaging needed for a lot of this high performance and AI data center compute, not just the two nanometer and now in the Angstrom era, the A14 roadmap for the front-end processes, but also that advanced packaging.

And I just grabbed one last slide here to round out the TSMC earnings report. We also had this yesterday again with ASML, some really long-term initiatives underway to increase adoption of large format photomasks for high NA EUV.

This is something that would probably not kick in until after 2030, perhaps well into the 2030s, but the development underway there, TSMC has deep pockets continuing to use that cash to make sure it remains a leader in semiconductor manufacturing.

They also announced expanded agreements with Sony Semiconductor. Check out the video we did on Sony Semiconductor and CMOS image sensors with Bob Ma earlier this year. So a lot of really great stuff going on at TSMC, a lot to be happy and pleased with if you were a TSMC shareholder.

We are most certainly more than happy and also not surprised by these results. The runway of growth for the next two years appears to be pretty straight and wide open.

So it doesn't mean an end of this fantastic run for TSMC, for ASML, and the other leaders in the semiconductor and AI bull market.