TSMC delivered another large earnings increase. Its US-listed ADR was nevertheless lower in our October 15 regular-session observation. The useful question is what shareholders are paying for the next stage of growth, and how much cash remains after funding it.
The ADR was observed at $418.21, down 2.74% from the October 14 regular close of $430.00. SPY was up 0.01% in the same retained observation set. These are intraday observations, not final closing prices; the difference does not establish why investors sold the stock.
The earnings grew; sequential margins did not
Third-quarter revenue reached $46.72 billion, up 41.2% in US dollars from a year earlier. Revenue measured in New Taiwan dollars grew 50.9%. Those percentages describe the same business in different currencies and should not be interchanged. Reported earnings were US$4.60 per ADR, with each ADR representing five ordinary shares. TSMC quarterly results.
The quarter's 66.4% gross margin and 58.7% operating margin show how much profit the manufacturing business is producing. There is a qualification: gross margin fell 1.3 percentage points from the second quarter. TSMC attributes the sequential dilution primarily to the initial N2 ramp. A strong annual growth rate therefore does not mean every profitability measure improved from the previous quarter.
Management's fourth-quarter revenue guidance is $52.3–$54.3 billion. The $53.3 billion midpoint is approximately 14.1% above Q3 revenue, while the gross-margin range is 65%–67%. Revenue growth and margin expansion are separate questions. The guidance describes management's expectations, not a guaranteed result or our own earnings forecast.
The cash left after building the capacity
The consolidated cash-flow statement shows third-quarter operating cash flow of approximately NT$919.78 billion and cash purchases of property, plant and equipment of NT$443.21 billion. Subtracting the statement amounts gives NT$476.57 billion of cash after PP&E purchases. That is close to, but slightly different from, TSMC's separately presented rounded free-cash-flow figure of NT$476.56 billion. Consolidated financial statements.
Over the four reported quarters through September, operating cash flow less cash PP&E purchases was approximately NT$1.48 trillion. This calculation excludes acquisitions, other investing flows and financing. It is not the cash available to a shareholder after every possible obligation, but it does show that the capacity buildout has not consumed all operating cash generation.
Keeping these cash-flow figures in their reported currency avoids converting an entire year's cash flows at one convenient exchange rate. The ADR trades in US dollars; the consolidated statement is reported in New Taiwan dollars. Both can be useful without pretending they are the same unit.
What the price already asks of the business
Adding the reported US-dollar ADR earnings for the latest nine months to the preceding fourth quarter gives approximately $15.54 of trailing ADR EPS. At the retained $418.21 observation, that is roughly 27 times those reported earnings. This is a trailing reference built from period-specific reported currency conversions, not a forward P/E, a consensus estimate or a claim that the stock is historically cheap. The trailing earnings and cash-flow bridges combine the current nine-month statements with TSMC's fourth-quarter 2025 statements.
A multiple around that level needs more than one strong quarter to justify itself. The business case is that advanced-node demand, utilization and pricing can sustain earnings and cash generation as the new capacity ramps. The risks include a semiconductor downturn, customer concentration, overseas manufacturing costs, currency changes and geopolitical disruption. Faster sales alone will not settle the return on all that investment.
A rebound still has to repair the chart
The recent decline began from a June 30 closing peak of $477.57 and reached a July 29 closing trough of $374.67, a 21.55% fall. The rebound from that trough to the October 14 close was 14.77%; that close remained 9.96% below the June closing peak. The drawdown and recovery are different moves with different starting points.
At the October 15 observation, the ADR remained below the completed 50-session average of $434.31, while above the 200-session average of $393.87. Both averages use completed regular-session closes through October 14, with the current observation shown separately.
The October 14 intraday low at $428.06 is a nearby reclaim reference, followed by the $430.00 prior close and the 50-day average. Below the observation, the September 15 low at $412.55 and the observed October 15 low of $407.13 help define the recovery attempt. The September level was already crossed earlier in the session; it is not support that held untouched all day.
The September 17 daily range gap at $419.85–$423.39 was also crossed by today's regular-session range. It should no longer be presented as an untouched gap below price. A daily retest setup means a test of the relevant level and a daily close above it. A brief bounce is not that confirmation. ADR price history.
TSMC's earnings and cash generation provide a substantive reason to follow the business. The valuation and the damaged short-term chart provide reasons to be selective about the evidence. The next test is whether the higher revenue outlook translates into durable per-ADR earnings and whether price can reclaim the levels it has lost.
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