TSM: bullish thesis update (TSM is already an open bullish idea)
TSMC reported a record third quarter on October 15 and raised its outlook. Revenue was $46.72B, above the top of its own $44.6B to $45.8B guidance range. Net profit rose 68.7% year over year. Q4 revenue guidance is $52.3B to $54.3B, about 58% growth at the midpoint, and management raised 2026 growth guidance to roughly 44%. The shares fell anyway. At $420.64 the stock is about 14% below its $487.47 high, and the PHLX Semiconductor Index lost 11.4% last week as the CoreWeave credit selloff spread to chip stocks.
The new information is that earnings are rising while the price falls, and options are cheap. TSM's IV rank is 10 and its IV percentile is 6, so a long-dated at-the-money call costs less than usual. The June 2027 expiry runs past two more earnings reports. That gives the Q4 guidance time to show up in reported numbers. The near-term sell-off came from AI funding fears, not from orders TSMC lost. Liquidity is rated 4. Q3 earnings are already out, so no report is due soon.
The main risk is that the selloff in AI-related credit keeps spreading. If CoreWeave or other neoclouds can't refinance, buyers of TSMC's advanced chips could cut orders. Beta is 1.41, so a broad Nasdaq drawdown will hit this position hard. Management has also guided that capex will cut full-year 2026 gross margin by about 2 points. Hot inflation data (September CPI at 3.7%, PPI at 6.3%) could push rates higher and lower the multiple investors pay for growth.