Taiwan Semiconductor Manufacturing (TSMC) posted record Q3 2026 earnings and strong forward guidance. Despite these results, TSMC faces increased investor skepticism. A recent analyst report reiterated a "Sell" rating. The company continues to demonstrate technological leadership and robust demand.
Primary concerns involve TSMC's aggressive capital expenditure. This expenditure is forecasted at $60-$64 billion for 2026. Potential pressure on gross margins is also a key issue. High costs stem from transitioning to next-generation 2-nanometer (N2) technology. Global expansion of manufacturing facilities also contributes to high costs. These factors pose risks to long-term profitability and free cash flow.
A broader market sell-off in technology stocks amplifies these anxieties. Doubts over the sustainability of massive AI-related spending by TSMC's key customers fuel this sell-off. TSMC's stock has faced pressure alongside the sector. Despite this, the majority of Wall Street analysts maintain a bullish outlook on TSMC's prospects.