7 Best Semiconductor Stocks to Buy Now

2) Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 158

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures, packages, tests, and sells integrated circuits and other semiconductor devices. Its advanced nodes, mainly N3 and N5, have been witnessing full utilization, demonstrating robust demand for cutting-edge semiconductor technologies. Therefore, a high utilization rate not only results in improved margins but strengthens Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s market position as a go-to manufacturer for advanced chips. The company’s capex strategy demonstrates its commitment to maintaining technological leadership and meeting growing demand.

The company’s management expects a 2025 capital budget of between US$38 billion and US$42 billion. The semiconductor industry has been evolving rapidly, with AI and high-performance computing coming out as critical growth drivers. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s healthy position in such segments should fuel its growth trajectory. The supply/demand imbalance in the semiconductor industry is expected to persist until at least 2026, benefiting the company’s pricing power and market position.

ClearBridge Investments, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:

“While the Strategy continues to have a significant position in Nvidia, we are underweight semiconductors versus the benchmark. We added to our semiconductor positioning during the quarter with the purchase of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). TSM, an out-of-benchmark name, is the world’s fabrication production provider of choice. The criticality and sophistication of its manufacturing footprint powers all of the leading edge fabless global semiconductor companies, including Apple, Nvidia, Qualcomm, AMD and Broadcom. While AI has driven upside in data centers, PCs and handsets are at cycle lows, positioning half of the company’s business for a recovery.”