10 Unrivaled Stocks of the Next 10 Years

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 dedicated contract chip manufacturer, or foundry having more than 60% market share. The company makes integrated circuits for customers based on their proprietary IC designs.

The company enjoys a wide economic moat due to its technological leadership, scale, and reputation. Also, strong brand recognition and high barriers to entry further solidify its competitive advantages. Its economic moat also stems from the cost advantage and intangible assets, which are realized due to its leading position in process technology, or nodes.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) possesses an even larger market share (~90%) of advanced chip manufacturing. This includes 3-nanometer chips, which continue to gain popularity and are becoming standard, and advanced chip packaging for larger components.

Well-renowned names, such as Apple Inc. (NASDAQ:AAPL) and NVIDIA Corporation (NASDAQ:NVDA), rely on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) to make their chips. This is because no other company can provide its capacity or technological expertise.

The company’s leading position in advanced processes should help it attract and retain more customers, see more stable utilization of production capacities, and lower production costs. Therefore, over the next decade or so, it should generate sufficient profits to finance R&D and capital expenditures on subsequent nodes.

Needham & Company LLC upped its price target on the shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) from $168.00 to $210.00. They gave a “Buy” rating on 15^th July.

Ariel Investments, an investment management company, released its 2Q 2024 investor letter. Here is what the fund said:

“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.”