10 Best AI Stocks to Buy According to Reddit

4. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 156

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest contract chip manufacturing company that manufactures chips for other companies. Its significant investments in chip fabrication and decades of expertise create a strong competitive advantage.

The quality and standards met at the company are so high that tech giants like Apple and NVIDIA rely on it to make chips for them. The company currently makes up 60% of the total chip manufacturing industry, and an even higher 90% of the advanced chip manufacturing (including 3-nanometer chips).

Second quarter revenue was $20.58 billion, representing a 33.30% year-over-year increase. This growth was supported by strong demand for industry-leading 3- (15% of wafer revenue), 7- (35% of wafer revenue), and 5-nanometer technologies (17% of wafer revenue), offset by the continued smartphone seasonality.

Advanced technology, defined as 7-nanometer and below, was the main contributor accounting for 67% of wafer revenue. The company’s high-performance computing platform (HPC) accounted for 52% of the total Q2 revenue for the first time.

Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) leadership in advanced processes will drive customer growth, stable production, and lower costs. This strong position is why it’s one of the best AI stocks according to Reddit. As of June 30, it is held by 156 hedge funds, with the largest stake valued at $4,937,464,673, held by Fisher Asset Management.

Ariel Global Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter:

“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) also traded sharply higher in the quarter, following its annual shareholder meeting where management highlighted robust earnings visibility. The boom in AI investment is driving significant demand for the semiconductor hardware that enables it. TSMC currently holds a dominant position in relevant chip manufacturing and packaging. Additionally, although AI investments have been mostly focused on the datacenter market, Apple’s recent announcement on “Apple Intelligence” kickstarted an Edge AI race—which will likely drive greater than expected semiconductor growth in smartphones. TSMC is Apple’s sole foundry partner which bodes well for the future. Overall, we continue to view TSMC’s scale, technology, business model, customer service and execution favorably. The fact the company remains committed to returning capital to shareholders through both buybacks and dividends is another plus.”