12 Best WallStreetBets Stocks To Buy According to Hedge Funds

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

Number of Hedge Fund Holders: 186

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is engaged in manufacturing, packaging, testing, and selling integrated circuits and other semiconductor devices. The company’s business in Q1 2025 was impacted by smartphone seasonality. However, this was partially offset by continued growth in AI-related demand. Moving into Q2 2025, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) expects its business to be supported by robust demand for its industry-leading 3nm and 5nm technologies. Notably, in Q1 2025, shipments of 3-nanometer made up for 22% of total wafer revenue, and 5- nanometer accounted for 36%.

From 2024 to 2029, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) expects revenue CAGR to approach 20% in US dollar terms, and long-term gross margin to be 53% and higher. The AI boom continues to fuel innovation in chip design, resulting in new types of processors and accelerators. Furthermore, the company’s collaborative approach with customers and advanced packaging technologies allows it to remain at the forefront of such innovations. This can result in the opening up of new revenue streams and market opportunities.

Sands Capital, an investment management company, published its Q4 2024 investor letter. Here is what the fund said:

“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)