Taiwan Semiconductor Manufacturing Co. is on track to report a 27% year-over-year increase in fourth-quarter net profit, driven by robust demand for advanced AI infrastructure chips. Analysts at major Wall Street firms forecast this will mark the company’s highest quarterly net profit in its history, reflecting surging orders from data center operators and hyperscale cloud providers. The company’s gross margin is expected to expand modestly as a result of higher-value 3nm and 5nm process node shipments, helping to offset incremental investments in next-generation capacity.

In the first three quarters of 2025, Taiwan Semiconductor posted record quarterly revenues in each period, with year-on-year growth averaging 22%. Revenue reached an all-time high in Q3, underpinned by strong sales of AI-optimized GPUs and custom SoCs. Over the same nine-month span, the company’s stock rose approximately 54%, outperforming both the broader semiconductor index and the S&P 500, although share reactions tended to be muted in the immediate five days following each earnings release.

TSMC’s lead in advanced packaging, particularly its CoWoS (chip-on-wafer-on-substrate) technology, is sold out through 2026, creating a bottleneck that the company has turned into pricing leverage. Management has signaled wafer price increases of up to 50% on its latest 2nm nodes compared to prior generations. Consensus estimates project EPS rising from $10.44 in 2025 to $16.57 by 2027, while forward P/E is expected to compress from roughly 30x to 19x over the same period.

FengHe Fund Management Pte. Ltd. boosted its stake in Taiwan Semiconductor by 253.5% during Q3, acquiring an additional 253,800 shares to reach 353,900 shares, making the company its largest portfolio position at approximately 9% of assets. On the shareholder return front, TSMC increased its quarterly dividend from $0.83 to $0.9678, representing an annualized payout of $3.87 and a yield near 1.2%, with a dividend-payout ratio of 25.7% based on last quarter’s earnings.