1. Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM)
Number of Billionaire Investors: 30
Billionaire Holdings: $14.6 Billion
Number of Hedge Fund Holders: 186
Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) is the world’s largest and most advanced semiconductor foundry. As opposed to the integrated device manufacturers (IDMs) such as Intel, TSMC operates exclusively as a pure-play foundry, and does not design its own chips but focuses on high-performance semiconductor fabrication. It plays a crucial role in the global technology supply chain by manufacturing chips for major companies, including Apple, NVIDIA, AMD, and Qualcomm.
There were interesting developments in the recent months for the company. Paul Liu, head of Taiwan’s National Development Council (NDC) and board member of Taiwan Semiconductor Manufacturing Ltd. (NYSE:TSM) dismissed the recent speculations that TSM was considering acquiring Intel’s foundry business. In fact, he clarified that the topic had never been discussed at the board level.
Additionally, there were concerns over TSM’s long-term business prospects in Taiwan after the company announced another $100 billion in the US. However, officials have downplayed such concerns and attributed the investments to global expansion rather than shifting business from Taiwan.
Underpinning the long-term outlook of TSM, in its Q4 2024 Baron Emerging Markets Fund investor letter, investment management company Baron Funds highlighted TSM as a key contributor to its Emerging Markets Fund. The company benefited from a cyclical semiconductor recovery and rising demand for AI chips. The fund remains confident in TSM’s strong market position, citing its technological leadership, pricing power, and exposure to high-growth industries such as AI, high-performance computing, automotive, 5G, and the Internet of Things. These factors are expected to drive sustained double-digit earnings growth in the coming years, reinforcing TSM’s long-term potential.
The stock remains a consensus Buy with most of the analysts having a positive opinion on TSM’s long-term outlook. In February, Needham analyst Charles Shi had reiterated his Buy rating with $225 price target, implying a 27% upside potential.
While we acknowledge the potential of TSM to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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