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1Clear out junk files and repair common Windows errors2Scan for outdated or missing drivers - takes under a minute3Repair Windows errors before they cause bigger problemsNeither stock is a better buy in the abstract. Applied Materials and TSMC are both benefiting from strong 2026 semiconductor demand, but they earn money at different points in the chip supply chain and carry different risks. Which one fits you depends on two things this comparison cannot settle by itself: the share price you pay and the kind of chip-industry exposure you want. The figures below are the most recent company-reported results and management guidance available as of early October 2026. They do not include current share prices or valuation multiples.
What each company actually sells
The two companies sit on opposite sides of the chip-making process. That difference matters more than the fact that both are large semiconductor names.
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Applied Materials (NASDAQ: AMAT)
Applied Materials makes materials-engineering equipment and related services that chipmakers use to manufacture semiconductors. Its revenue rises when customers buy equipment for new capacity or new process technology, so its results follow the timing, product mix, and geography of those purchases. In practice, Applied is a bet on how much and where chipmakers choose to invest.
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TSMC is a dedicated foundry. It manufactures chips for customers and records the value of that production as its own revenue. Its earnings therefore track chip volumes, advanced-node demand, factory utilization, product mix, manufacturing execution, and the cost of expanding capacity. In practice, TSMC is a bet on how many advanced chips get built and how efficiently it builds them.
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TSMC’s 2025 annual report states that “the annual capacity of the manufacturing facilities managed by TSMC and its subsidiaries exceeded 17 million 12-inch equivalent wafers in 2025.” That is a capacity figure. It does not show how many wafers were actually produced or how fully the plants were used, so it should not be read as output.
Latest reported results and guidance
The table lists the most recent figures from each company. The periods differ, so read each row within its own company rather than across the columns as if they were the same quarter.
| Measure | Applied Materials | TSMC |
|---|---|---|
| Latest reported period | Fiscal Q3 2026, ended July 26, 2026 (results released Aug. 13, 2026) | Q2 2026 |
| Revenue | $9.12 billion, up 25% year over year | $40.20 billion |
| Earnings per share | $3.50 non-GAAP, up 41% year over year | Not stated in the figures used here |
| Gross margin | Not stated in the figures used here | 67.7% |
| Operating margin | Not stated in the figures used here | 60.3% |
| Guidance for the next period | Fiscal Q4 2026 revenue of $10.25 billion, plus or minus $500 million; non-GAAP diluted EPS of $4.02, plus or minus $0.20 | Q3 2026 revenue of $44.6 billion to $45.8 billion; gross margin of 65.0% to 67.0%; operating margin of 56.0% to 58.0% |
| Company source | Applied Materials Q3 fiscal 2026 results release | TSMC 2026 Q2 quarterly results |
Applied’s earnings figures are non-GAAP. Non-GAAP EPS is not interchangeable with GAAP EPS, so do not set Applied’s $3.50 beside a GAAP earnings figure from TSMC or from any other source and call the comparison like-for-like. Guidance is management’s estimate for a future quarter. It is not a reported result, and neither company’s guidance is an independent forecast.
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Revenue size also misleads. TSMC books the value of chips it manufactures, while Applied sells equipment and services to the manufacturers who make those chips. A larger TSMC revenue line therefore does not mean a larger investment opportunity. Growth rates, margins, capital needs, and valuation should be compared within each business model.
What the demand signals say
Both companies point to AI-driven demand, but the signals come from different places and cover different periods.
Applied Materials
CEO Gary Dickerson said in the fiscal Q3 2026 release: “As the rapid global adoption of AI drives unprecedented demand for our materials engineering solutions, we are further raising our Semiconductor Systems revenue expectations for calendar 2026 and are confident we will grow faster than the market this year.” That is management’s own view, not a neutral forecast. The same release points to continued strength in DRAM, leading-edge foundry-logic, and advanced packaging. The midpoint of Applied’s fiscal Q4 revenue guidance is about 12% above its fiscal Q3 revenue.
TSMC
TSMC’s Q3 2026 revenue guidance of $44.6 billion to $45.8 billion is roughly 11% to 14% above its Q2 2026 revenue of $40.20 billion. That is a guidance range from management, not a reported outcome. Its 2026 reporting shows high gross and operating margins, but whether those margins hold depends on utilization, product mix, and the cost of capacity expansion.
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Risks each company discloses
The risks below come from each company’s SEC filings. They are risk factors the companies have chosen to disclose, not predictions that any of them will occur.
Applied Materials: customers, rules, and orders
- Customer and geographic concentration. The FY2025 Form 10-K says Applied’s customer base is particularly concentrated in China, Taiwan, and Korea.
- Export controls and trade policy. Changing regulations can restrict which customers Applied can serve and what it can ship.
- Order volatility. Customers can change or cancel orders, and customer spending can shift quickly.
- Supply-chain constraints. Shortages of components can limit how much equipment Applied can deliver.
TSMC: trade, supply, and Taiwan
- Trade and export rules. The FY2025 Form 20-F discusses trade tensions, export controls, and tariffs.
- Equipment and materials. Access to manufacturing equipment and raw materials is a disclosed dependency.
- Taiwan-related disruption. The filing states that geopolitical, economic, or social disruption affecting Taiwan could adversely affect TSMC’s operations and results. Its manufacturing base is located in Taiwan, which is why this risk sits at the center of its profile.
Both companies depend on the global semiconductor supply chain. The difference is where the risk sits. Applied’s exposure is mainly about how much its customers spend and where those customers are allowed to operate. TSMC’s exposure is mainly about one manufacturing footprint and the political and logistical conditions around it.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Valuation: the step this comparison cannot complete
This comparison does not include same-date share prices or valuation multiples, so it cannot say which stock is cheaper or which offers more upside. Prices move every trading day, and a share price already reflects expectations about demand, including the guidance cited above. Two stocks can have strong reported growth and still be a poor purchase at the wrong price.
To complete the comparison, use these checks on the same date for both companies:
- Share price and market value taken from the same trading day for AMAT and TSM, with TSM’s US-listed ADS compared against its Taiwan line only with the exchange and currency difference accounted for.
- Earnings multiple on one basis. Use non-GAAP earnings for Applied consistently, and apply the same basis to TSMC’s earnings rather than mixing measures.
- Cash-flow measure, such as free cash flow yield, over a matching trailing period, because capital spending differs sharply between an equipment supplier and a foundry.
- Forward estimates by each company’s own guidance period: fiscal Q4 2026 for Applied and Q3 2026 for TSMC, labeled as management estimates.
- Capacity spending, because TSMC’s expansion costs weigh on its cash flow and returns in a way Applied’s customer-driven sales do not.
Which stock fits which investor
The two companies offer different exposures, and the table below sets out how they differ for an investor deciding between them.
| Question | Applied Materials | TSMC |
|---|---|---|
| Core exposure | Chipmakers’ equipment and service spending | Foundry manufacturing volume and advanced-node demand |
| Main earnings lever | Timing, mix, and geography of customer equipment purchases | Chip volumes, utilization, product mix, and manufacturing execution |
| Largest disclosed concentration | Customers concentrated in China, Taiwan, and Korea | Manufacturing based in Taiwan |
| Best suited to an investor who | Wants exposure to the build-out of chip capacity and process technology, and accepts customer-spending cycles and export-rule exposure | Wants exposure to foundry manufacturing demand, and accepts Taiwan-related operating risk |
Work through the choice in this order:
- Check the price first. If the stock you prefer already assumes that current guidance is met and then some, the upside case narrows regardless of how strong the business is. Use the valuation checks above before deciding.
- Choose the exposure. If you want to bet on how much chipmakers invest in equipment, Applied fits. If you want to bet on how many advanced chips are manufactured, TSMC fits.
- Test your tolerance for the disclosed risks. Applied’s main sensitivity is to customer spending and export rules. TSMC’s main sensitivity is to its Taiwan footprint. An investor who cannot accept one of these should lean toward the other.
- Match the horizon. Equipment spending and foundry volumes both move with the semiconductor cycle, so a short holding period carries more timing risk than a multi-year one for either company.
If you have not yet checked valuation, neither company should be bought on reported growth alone. The conditions above, applied with current prices, are what decide between them.
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