DEEP DIVE EXPLAINER
TSMC (TSM) Deep Dive: Record Quarter, Stock Down
Published Oct 19, 2026 · Updated Oct 19, 2026
TSMC just posted a record quarter. Why did the stock fall, and what are we watching?
On the numbers, no rush and no rejection: WATCH. TSMC's Q3 2026 revenue was $46.72B, up 41.2% year over year, with gross margin of 66.4%. The ADR still closed at $412.61 on Oct 16, 2026, about 15% below its record close, because the market is pricing tomorrow's capacity race, not last quarter. Our staged buy zone is $395 to $425; a sustained close below $395 ends the setup.
Prices and technicals as of the Oct 16, 2026 close. Financials from TSMC's Q3 2026 report (6-K filed Oct 15, 2026).
The verdict and the setup
| Item | ZeroGamma view |
|---|---|
| Verdict | WATCH |
| Staged buy zone | $395 to $425 |
| Invalidation | A sustained close below $395 |
| Why $395 | The 200-day average sits at $395.05 |
TSM price levels as of the Oct 16, 2026 close. The stock sits below its short-term averages and above the 200-day line that defines the setup.
Price context
| Measure | Value |
|---|---|
| Close, Oct 16, 2026 | $412.61 |
| Move that day | -2.28% |
| Record close, Oct 5, 2026 | $485.80 |
| Distance below the record close | about 15% |
| RSI | 34.2 |
| 20-day average | $452.47 |
| 50-day average | $434.36 |
| 200-day average | $395.05 |
Q3 2026, as reported
| Measure | Value |
|---|---|
| Revenue | $46.72B |
| Revenue growth, year over year | +41.2% |
| Gross margin | 66.4% |
| Operating margin | 58.7% |
| Net income growth, year over year | +68.7% |
| EPS per ADR | $4.60 |
Q4 2026 guidance
| Measure | Guided range |
|---|---|
| Revenue | $52.3B to $54.3B |
| Gross margin | 65% to 67% |
| Operating margin | 56.5% to 58.5% |
The structure underneath
- TSMC held 72.5% of the global foundry market in Q2 2026 (TrendForce). Samsung was second at 5.9%.
- Q3 wafer revenue mix: 2nm 8%, 3nm 33%, 5nm 28%. Advanced nodes were 79% of wafer revenue.
- The ADR trades at a premium of about 8.9% over the Taipei line.
- Scenario frame from the report: $470 to $490 over 3 months, and $540 to $590 over 6 months.
What we are watching
- The Q4 print in mid-January 2027, measured against the guidance above.
- Whether the $395 line holds on a closing basis.
- Capex commentary against the $60B to $64B guide.
What this does not prove
A strong quarter does not schedule a recovery. The verdict is a research view with an invalidation line, not a recommendation. Single-name risk is real, and position sizing is the reader's decision.
Sources and method
Financials from TSMC's Q3 2026 report, filed on Form 6-K on Oct 15, 2026. Prices and technicals as of the Oct 16, 2026 close. Foundry market share from TrendForce, Q2 2026. This page summarizes the full deep dive; the PDF below is the complete document.
Read the research
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