Taiwan Semiconductor Manufacturing's (TSM) Q3 revenue of NT$1.494 trillion ($46.77 billion) represented a roughly 3% beat versus the brokerage's prior estimate and consensus, compared with a 1% beat in the previous quarter, Wedbush said in a Friday note.

With revenue ahead of the range, Wedbush expects the quarterly gross margin to at least meet the 66% midpoint of TSMC's 65% to 67% guidance and is more likely to exceed its 66.0% estimate given better utilization rates, according to the research note.

Looking ahead, Wedbush expects Q4 sales of NT$1.599 trillion and sales growth of 41% in US dollars or 43% in Taiwanese dollars.

Additionally, its gross margin estimate of 65.3% sits below the consensus estimate of 66.1%, with Wedbush saying it would not be surprised if Q4 gross-margin guidance ticks modestly lower on account of headwinds the chipmaker has previously mentioned.

Wedbush maintained its outperform rating with an NT$3,000 price target.

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