10 Most Promising Tech Stocks According to Hedge Funds

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

Number of Hedge Fund Holders: 156

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the most promising technology stocks according to hedge funds. The semiconductor company makes chips for technology giants like NVIDIA and AMD.

In September, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) logged $7.82 billion (NT$251.87 billion) in revenue, an increase of 40% year-over-year. On October 14, Reuters reported that the company is expected to report a 40% increase in revenue in FQ3 2024, due to soaring demand for AI and AI products. Analysts polled by Reuters expect third-quarter revenue to reach $9.27 billion.

TMSC expects to spend $40 billion to $32 billion in capital expenditure in 2024. 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.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is expanding its presence across the world, especially in Europe. The company recently formed a joint venture with major partners, in Dresden, Germany. The joint venture will position TMSC as a leader in the foundry industry.

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, making it one of the most promising technology stocks according to hedge funds.

Diamond Hill Capital stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (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.”