TSMC beat expectations with ~60% y/y Q4 revenue growth guidance and 58.7% operating margin. AI demand still exceeds supply and TSMC has pricing power, though near-term margins dip on the 2nm ramp. The stock fell despite record profits amid semiconductor and macro selling; that valuation is an opportunity to watch.

We're back with " Morning Trade Live" to focus on a chart for TSMC. This year is what really tells the story. I mean, obviously we saw a huge upswing throughout 2026, but we've fallen back from those high levels, especially as the semiconductor sector has borne the brunt of the intense selling pressure we've seen recently.

However, the stock is still up about 40% since the beginning of the year, and even more than 40% so far this year . We are trading down 3% today despite achieving record profits.

So, let's delve into the numbers and analyze TSMC's performance and its insider earnings report.

Yes, thank you for having me. I mean, the results were strong and clearly exceeded expectations. They provided guidance for fourth-quarter earnings, with revenue growth approaching 60% year-over-year.

Those are very strong and truly impressive numbers. As well as the growth in third-quarter revenues.

Most importantly, they have very strong confidence regarding capital expenditures heading towards 2027. I believe that what confirms this is their sending field teams to check the progress of data centers and power supplies, which gives them great confidence regarding those capital expenditures in the future.

I think all the indicators from the earnings call confirm that the momentum of artificial intelligence is not slowing down. The demand for artificial intelligence still exceeds the supply.

Speaking of TSMC, they allocate capital with extreme discipline. In order to add new factories or expand their production capacities, they need real contracts and commitments from their customers.

So, they have sufficient demand, and they have the power to set prices. I mean, with operating margins as high as 58.7%, do you think they might raise prices even further? Because it was interesting to see CC Wee earlier this year saying that they probably don't have the desire to do so , even though memory companies do .

But we have certainly seen a slight change in tone regarding the increase in some of those prices based on the reports.

Yes, back in July, CCW was actually saying they really wanted to be a long- term partner, but I think on this earnings call , they also mentioned there's no potential ceiling for that.

So, we'll see in January whether we've actually seen good margins even with increased 2nm technology production and the addition of more facilities in the United States. These things will affect the margins, but despite all that, the margin numbers came in very strong.

So, I think ultimately they will be very stable and will work with companies like Nvidia and others to determine the best prices going forward by 2027. And with a company like TSMC, I mean, if capital expenditures are raised again going into the new year, is there a concern about access to capital or its cost for a company of this size?

The market has oversold many existing names in the infrastructure sector, which still face supply constraints. Yes, they have concerns. The long-term contract extends to 2028-2030, but their valuation is shrinking now due to anxiety in the capital market.

Therefore, I believe this is an opportunity that investors should keep an eye on.

Derek, we always appreciate your insights and analyses. Thank you very much for joining us today to analyze TSMC's earnings results. Let's trade the stock now with Tom White, host of Fast Money.

I mean, a one-year graph really explains everything. I mean , those were clearly impressive numbers, weren't they? Record profits for the sixth quarter are here, yet the stock is still declining along with the market as a whole.

Yes, Sam, you are seeing a slight decline. I think this is an overall trend we are seeing now because the numbers have been excellent. If you look at their operating margins of 58.7% and net profit margin of over 51%, they have exceeded expectations in revenue and profit and have raised their guidance.

There is a slight dip in some margins for the current quarter , but that is due to the reset of production of the 2nm chips they are currently producing as they continue to grow this sector of their business .

But with the decline we are seeing, I looked at some levels that might act as support; Around 395 will most likely be a support point at the 200-day simple moving average. We haven't gone lower than that in a while.

So, this is how I looked at it, where I could take a position in TSM stock while giving myself a margin of safety.

There are some ongoing macro events that are negatively impacting the sector and the stock. So, I turned to the weekly November 6th options . With 22 days until expiration, I gave myself a little over 3 weeks, and I will sell the put option at a strike price of 395 and buy the put option at a strike price of 385.

This is still a stock priced at $417. You must remember that. These are high- priced stocks that you deal with. Therefore, maintain specific risk limits. Selling a vertical put option with a bid of $10, neutral to bullish, with an approximate payout. I received a $2.50 credit on it.

This is the price at which it was trading earlier. It may now be trading closer to $2 because the stock bounced off its session lows, but the balance you get is what you can profit from.

So, if you accumulate $250 with a risk of $750, that is still far below the $ 385 level downside. Now , the breakeven point at 392.50 over the next 22 days is about 6 % lower than the current TSM share price.

So, you give yourself that space of safety when landing. The probability that the execution price of 395 will be out of range at expiry within the next three weeks is approximately 72 %.

Therefore, you have a higher probability of success, but for this reason the risk here is greater than the potential return in this type of position.

However, in line with this potential support zone, SAM is at around $395 over the next three weeks with this short negative vertical position. Well, a good look at TSM after what were some great numbers here.

We are declining , of course, in parallel with the broader market. As she says, macroeconomic factors are putting pressure on this deal today.