KUALA LUMPUR, Nov 5 (Bernama) -- Bursa Malaysia closed higher, buoyed by Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 2.75 per cent, alongside positive cues from Wall Street. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 19.30 points, or 1.19 per cent, to 1,635.86 from Wednesday’s close of 1,616.56. The benchmark index opened 6.72 points higher at 1,623.28, and fluctuated between an intraday high of 1,642.44 and a low of 1,622.62 during the trading session. However, market breadth was negative, with losers outnumbering gainers 723 to 497, while 466 counters were unchanged, 1,075 untraded and 10 suspended. Turnover rose to 3.74 billion units valued at RM3.61 billion compared with yesterday’s 2.81 billion units valued at RM2.57 billion.
Taiwan Semiconductor Manufacturing Company (TSMC) will report its Q4 earnings on January 15, taking center stage as the most critical “pick-and-shovel” play in the global AI boom. With AI chip demand accelerating and expectations running high, investors are less focused on headline numbers and more on forward guidance, capacity expansion, and long-term AI visibility.
Options Market: Caution Ahead of Earnings
The derivatives market is signalling defensive positioning into the print:
Put/Call ratio: 1.64 on open interest of 1.76 million contracts
Implied volatility: 43.33%, well above historical volatility of 31.25%
IV Percentile: 67%, indicating options are moderately expensive
This suggests institutions are hedging against downside risk, even if results come in strong — a sign that expectations for guidance may be difficult to exceed.
Q4 Financial Expectations (Consensus)
Revenue
US$32.38bn (+20% YoY, -2% QoQ)
Within guidance range of US$32.2–33.4bn
In NTD terms: NT$1,046bn (+20% YoY, +6% QoQ)
Margins
Gross margin: 60.4% (near top of guidance)
Operating margin: 50.7%
Net Income
US$14.58bn (+26% YoY)
Key nuance: FX matters. Using TSMC’s guided exchange rate (USD/NTD 30.6), USD revenue could reach US$34.2bn, effectively above guidance, highlighting currency tailwinds.
Three Things the Market Is Watching Closely
1. 2026 Revenue Outlook and AI Growth Trajectory
Street expects ~25% YoY revenue growth in 2026
Management previously guided AI-related revenue CAGR above mid-40% (2024–2029)
Any upgrade or reaffirmation would be a major positive signal
2. CoWoS Capacity Expansion
AI chip supply is constrained by TSMC’s CoWoS (advanced packaging) capacity.
Goldman Sachs recently raised forecasts sharply:
2026E: 1.19m wafers
2027E: 2.20m wafers (+85% YoY)
Advanced packaging now contributes ~10% of revenue
Investors want clarity on how fast capacity can scale
3. Capex Direction for 2026
Market consensus: US$45.4bn capex in 2026
2025 guidance: US$40–42bn
Equipment stocks are rallying on expectations that TSMC will open the capex spigot
Any signal of more aggressive expansion could re-rate the entire semiconductor supply chain
Investment Takeaway
TSMC remains the ultimate gatekeeper of global AI computing capacity. While Q4 numbers are important, guidance carries far more weight:
Bull case: Strong AI outlook + faster CoWoS ramp + higher capex
Risk: Great results but cautious guidance disappoint elevated expectations
Historically, TSMC shares have risen after 7 of the last 9 earnings reports, but with expectations already stretched, volatility around the announcement is likely.
Bottom Line
TSMC’s earnings are not just about one quarter — they are a referendum on the durability of the AI cycle. If management reinforces long-term demand confidence, the stock remains well-positioned as the backbone of the AI ecosystem. If not, even solid numbers may struggle to move the needle.
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