10 Best Major Stocks to Invest In According to Analysts

2. Taiwan Semiconductor Manufacturing Company (NYSE:TSM)

Average Upside Potential: 33.04%

Market Cap as of September 26: $943.37 billion

Number of Hedge Fund Holders: 156

Taiwan Semiconductor Manufacturing Company (NYSE:TSM) is a semiconductor contract manufacturing and design company, focusing on integrated circuits (ICs) for other companies, known for its advanced manufacturing technology, high-quality products, and strong customer base.

It’s a leading semiconductor foundry and dominates the market with over 50% share in manufacturing chips for fabless companies. Renowned for its cutting-edge technology, it produces advanced 2nm and 3nm nodes, powering major tech giants. It makes up 60% of the total chip and 90% of the advanced chip manufacturing industry.

In collaboration with Ansys and Microsoft, the company has significantly accelerated silicon photonic simulations using Azure’s AI infrastructure. This partnership has achieved a 10x speedup in Ansys’ Lumerical FDTD software, enabling faster and more accurate simulations for complex multiphysics silicon solutions. It’s also producing Apple’s A16 chips at its Arizona facility. While initial production is limited, it’s expected to significantly increase once the plant’s expansion is complete in early 2025.

Revenue surged 33.3% in the second quarter of 2024, driven by strong demand for its advanced 3nm, 7nm, and 5nm technologies, which together accounted for 67% of wafer revenue. The 7nm node was the most popular, contributing 35% of wafer revenue. Notably, HPC platforms made up over half of TSMC’s Q2 revenue for the first time.

The company’s leadership in advanced processes drives customer growth, stable production, and lower costs. Management estimates a 10% growth in the overall semiconductor market (excluding memory) for the full year 2024. Its dominant position in the semiconductor industry is bolstered by its long-standing partnerships with major tech companies and its reputation for superior quality.

Diamond Hill Long-Short Fund stated the following regarding Taiwan Semiconductor Manufacturing Company (NYSE:TSM) in its Q2 2024 investor letter:

“On an individual holdings’ basis, top contributors to return in Q2 included our long positions in Alphabet, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and Microsoft. Semiconductor manufacturer Taiwan Semiconductor’s (TSMC) fundamentals remain solid as demand for its chips continues growing — particularly as the machine learning and cloud computing trends gain more traction.”