10 Best Future Stocks For The Long-Term

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

Number of Hedge Fund Holders: 156

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) ranks second on our list of the best future stocks for the long term. TSMC is a semiconductor manufacturing and design company. The company is a leading fabrication partner that makes chips for tech giants including Nvidia and AMD.

In the second quarter of 2024, the company’s revenue increased by 13.6% sequentially, led by growing demand for its nanometer technologies. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) expects revenue from AI chips to increase at a compound annual growth rate (CAGR) of 50% by 2027. For the year ended 2024, TSMC projects a 20% growth in revenue, again driven by the demand for chips used in artificial intelligence.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) will be successful as long as technology remains trending. Success does not come without dedicated strategic investments in technology and that is exactly what the company does. TMSC expects its 2024 capital expenditure budget to lie between $30 billion and $32 billion. Of this, 70% to 80% of the budget will be allocated to advanced process technologies, nearly 20% will be directed to specialty technologies, and 10% will be spent on advanced packaging, testing, and mass-making.

Despite macro headwinds and geopolitical turmoil in the country, analysts are bullish on the stock, and their 1-year median price target of $209 points to a 25% upside from current levels. Overall, TSM was held by 156 hedge funds at the close of Q2 2024 with total stakes amounting to $21.28 billion. As of June 30, Fisher Asset Management was the largest shareholder with a position worth $4.94 billion.

Wedgewood Partners’ Wedgewood Partners stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter:

“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was a top contributor to performance during the quarter. The Company’s revenue growth continued to accelerate due to the rollout of its leading-edge N3 manufacturing node along with strong demand for chips used in artificial intelligence applications. Unlike in traditional CPUs, the Company has blue-chip customers, monopoly market share for manufacturing AI chips, such as GPUs. The Company’s aggressive investment in capital equipment several years ago should continue to pay off as fabless chip designers proliferate and require a manufacturing partner to shoulder capex risk. The Company’s continued aggressive investment and deployment in semiconductor manufacturing equipment is not an easily replicable competitive advantage.”