Article by Edward Sheldon
TSMC and ASML Q3 Earnings Show No Sign of an AI Slowdown
October 16, 2026 | Research
Taiwan Semiconductor Manufacturing Company and ASML are two of the most important names in the AI ecosystem. The former manufactures the vast majority of the world’s AI chips while the latter specializes in sophisticated chip manufacturing equipment that is required to produce these advanced chips.
Recently, these two companies posted their earnings for the third quarter of 2026, giving investors a look at their performance and some insight into trends within the AI chip market. Here’s what we learnt from these earnings reports.
Taiwan Semi: Strong Demand for Advanced AI Chips
Taiwan Semi’s Q3 results1 beat estimates, powered by high demand for AI chips. For the quarter, revenue was up 51% year-over-year to NT $1.49 trillion (versus $1.47 trillion expected) while net income was up 69% to NT $763.1 billion (versus $746.3 billion expected).
Gross margin for the quarter was 66.4% while operating margin was 58.7%. That compares to 59.5% and 50.6% in Q3 2025.
Breaking Taiwan Semi’s revenue figure down, 68% came from High-Performance Computing (HPC). Advanced technologies – defined as 7-nanometer and more advanced technologies – accounted for 79% of total wafer revenue.
Looking ahead, the company forecast Q4 revenue between $52.3 billion and $54.3 billion. At the midpoint, that represents a 14% increase quarter-over-quarter and a 58% increase year-over-year.
Commenting on the results, CFO Wendell Huang said that Q3 performance was supported by strong demand for the company’s leading-edge process technologies. He added that, moving into fourth quarter 2026, the company expects the business to be supported by continued strong demand for its technologies, including the steep ramp-up of its 2-nanometer technology.
On the earnings call2, CEO C.C. Wei said that demand was "extremely robust" and that the company is seeing no sign of a slowdown in the AI mega trend. He also said that the emergence of agentic AI central processing units (CPUs) and continued demand for networking chips will further drive future silicon demand.
ASML: Seeing Order Interest Out to 2030
Turning to ASML, it also produced a strong Q33 print due to high demand for its products. For the quarter, the company posted total net sales of €11.7 billion, gross margin of 57.5%, and net income of €5.0 billion versus figures of €7.5 billion, 51.6%, and €2.1 billion for Q3 FY2025.
During the quarter, the company sold 113 new lithography systems and eight used systems. That compares to 85 and five in Q2 and 66 and six in Q3 2025.
Looking ahead, management said that it is expecting net sales of €14.2 billion to €15.2 billion for Q4. Analysts polled by LSEG had expected Q4 sales of €14.2 billion4.
For the full year, management is expecting total net sales to be between €44 billion and €45 billion with a gross margin of 56%. For 2025, total net sales were €32.7 billion, and the gross margin was 52.8%.
In ASML’s earnings report, President and Chief Executive Officer Christophe Fouquet said that the group’s customers continue to increase their short- and medium-term equipment demand forecasts, driven by their views on the size and duration of AI-related investments. Notably, he said that some customers have been expressing an interest in placing orders with the group for 2029 and 2030.
Fouquet added that supply for both 2027 and 2028 will not be able to fully meet the demand of its customers. Given this issue, the company is exploring ways to increase capacity for 2028 beyond the 30% increase previously communicated.
The AI Boom is Far from Over
In summary, both TSMC and ASML delivered blockbuster Q3 earnings. Their results showed that momentum across the semiconductor industry remains exceptionally strong.
The key takeaway here is that the AI megatrend is showing no signs of a slowdown. With Taiwan Semi expecting agentic AI CPUs and networking chips to drive demand and ASML seeing order interest out to 2030, the AI growth story appears to be far from over.
Footnotes:
1TSMC Reports Third Quarter EPS of NT$29.43, as of October 15, 2026
2Investing.com, Earnings call transcript: TSMC beats Q3 2026 estimates as stock slips, as of October 15, 2026
3ASML, ASML reports €11.7 billion total net sales and €5.0 billion net income in Q3 2026, as of October 14, 2026
4Reuters, ASML forecasts Q4 sales above expectations on AI chip demand (updated), as of October 14, 2026
Author is a contractor of Leverage Shares LLC, a U.S. affiliate of Themes Management Company LLC. Leverage Shares LLC provides certain services to Themes under an intercompany services agreement.
