11 Most Promising Stocks According to Analysts

5. Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM)

Number of Hedge Fund Holders: 186

Average Upside Potential as of April 23: 41.23%

Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) manufactures, packages, tests, and sells integrated circuits and other semiconductor devices. It provides various wafer fabrication processes, such as processes to manufacture complementary metal-oxide-semiconductor logic, mixed-signal, radio frequency, embedded memory, bipolar CMOS mixed-signal, and others.

In FQ1 2025, HPC made 59% of the company’s total revenue, which totaled $25.78 billion and improved by 41.40% year-over-year. This HPC revenue itself improved by 7% sequentially due to the sustained demand for AI-related applications, which the CEO of the company anticipates to double in revenue in 2025. This category of AI accelerators includes AI GPUs, AI ASICs, and HBM controllers used for both AI training and inference in data centers.

To support this explosive growth in AI and HPC, TSMC is making substantial investments in advanced packaging technologies, particularly CoWoS (Chip-on-Wafer-on-Substrate). TSMC is working to double its CoWoS capacity in 2025. Despite a projection of a mid-40% revenue CAGR from AI accelerators for the five years starting from 2024, Barclays analyst Simon Coles lowered the price target on the stock to $215 from $255 while maintaining an Overweight rating on April 21.

The company’s results and guidance showcased strong AI chip demand, which is why Sands Capital Technology Innovators Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q4 2024 investor letter:

“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) third-quarter 2024 results and guidance showcased strong continued demand for artificial intelligence (AI) chips. Revenue increased by 29 percent, and earnings saw a 54 percent rise year-over-year. Gross margins were at their highest since 2022, bolstered by price hikes and record utilization at both the 3 nanometer (nm) and 5nm nodes. TSMC’s full-year revenue outlook was revised upward from 25 percent to 30 percent growth. The company also anticipates higher capital expenditure in 2025, a leading indicator for revenue.

Meanwhile, TSMC’s competitive position within the leading-edge chip fabrication industry has improved. The company noted that demand for its next-generation 2nm (N2) node is considerably higher than for its predecessor, N3. Additionally, TSMC has more capacity for N2 than N3. This situation contrasts with Intel and Samsung, which both recently disclosed struggles in ramping up their leading-edge nodes. Together, Intel and Samsung account for approximately $25 billion of foundry revenue, which could potentially migrate to TSMC over time…” (Click here to read the full text)