[Earnings Recap] TSMC Beats Again. Is the Bar Getting Too High?

TSMC delivered a clear beat-and-raise quarter but fell with the broader chip sector. Charles Schwab also declined as a small net-interest-margin miss overshadowed record asset gathering. After the bell, rising costs hit J.B. Hunt, while Interactive Brokers’ dividend increase failed to produce a rally.

$Taiwan Semiconductor Manufacturing(TSM)$ lost 1.8%

TSMC is the world’s largest contract chipmaker and manufactures advanced processors for Nvidia, Apple and other technology companies.

Third-quarter revenue jumped 41% to $46.72 billion, beating the $45.67 billion consensus. EPS of $4.60 per ADR topped the $4.46 estimate, while net income surged 69% to a record NT$763.1 billion.

Advanced nodes accounted for 79% of wafer revenue, including an 8% contribution from the newly ramping 2-nanometer process. TSMC projected fourth-quarter revenue of $52.3 billion to $54.3 billion, well above Wall Street’s roughly $50.2 billion forecast. Gross margin is expected to remain between 65% and 67%.

The ADRs still lost 1.8% on Oct. 15. Investors are questioning whether current AI spending and semiconductor valuations can be sustained, leaving even a sizable beat unable to break the sector’s prolonged losing streak.

$Charles Schwab(SCHW)$ fell 2.7%.

Charles Schwab provides brokerage, banking and wealth-management services to individual investors and financial advisers.

Adjusted EPS rose 29% to $1.69, ahead of the $1.65 consensus. Revenue increased 17% to $7.17 billion, broadly in line with expectations.

Core net new assets reached a record $190.4 billion, taking total client assets to $13.33 trillion. Schwab added 1.2 million brokerage accounts, while daily trading activity increased 44%.

Shares fell 2.7%. Net interest margin came in at 3.04%, about four basis points below expectations, and the nearly in-line revenue result left little upside for investors. Schwab did not issue new full-year targets, though management said client engagement, lending and wealth-management activity remained strong.

$Interactive Brokers(IBKR)$ fell about 1% after hours

Interactive Brokers operates a low-cost electronic trading platform used by active investors around the world.

The brokerage reported GAAP revenue of $1.91 billion and adjusted revenue of $1.87 billion, slightly above expectations. GAAP EPS was 69 cents, while adjusted EPS of 67 cents matched the consensus.

Customer accounts climbed 35% to 5.58 million, and margin loans grew 36% to $105.2 billion. Daily average revenue trades increased 18%, although customer stock volume dropped 24% and options activity slipped 1%.

Interactive Brokers raised its quarterly dividend from 8.75 cents to 15 cents per share. The stock nevertheless fell about 1% after hours, as slower equity trading and a strong 34% year-to-date rally limited enthusiasm for an otherwise solid quarter.

$JB Hunt Transport(JBHT)$ dropped 4.2% after hours.

J.B. Hunt is a major U.S. freight company specializing in intermodal rail and truck transportation.

Revenue increased 20% to $3.68 billion, above the roughly $3.6 billion forecast. EPS of $1.82 edged past the $1.81 consensus, while intermodal revenue rose 20%.

Higher diesel, insurance, healthcare and driver-recruitment expenses sharply reduced operating leverage. Management said some of those pressures are likely to continue into the fourth quarter and 2027 and plans to seek higher prices from customers.

Shares dropped roughly 4.2% after hours. The small earnings beat was measured against estimates that had already been cut, while the margin pressure suggested that stronger freight volumes may not translate into equally strong profit growth.

Today’s discussion:

TSMC just delivered another strong quarter, but the stock still fell. Have investors started expecting too much from AI stocks?

• 🅰️ Yes. Even great earnings are already priced in.

• 🅱️ No. AI demand is still growing, and there's more upside ahead.

• 🅲 It depends. I'd be more selective about which AI stocks I own.

What's your take?