We recently published a list of Top 10 AI News You Should Pay Attention To. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against other top AI news you should pay attention to.
LinkedIn co-founder Reid Hoffman said in a latest program on CNBC that the DeepSeek breakthrough was not “news” for him and many tech insiders as he believed sooner or later more efficient models would be launched. However, he sees China’s rise in the AI race as surprising:
“I do think that the thing that is news is, well, look, as we’ve been saying, China is in the game. This is actually, in fact, a game-on competition, and it was resoundingly demonstrated that way. There is good, useful work that comes out of it.”
The tech investor believes efficiency will lead to more use cases and usage:
“Say, for example, you can train a model on a thousand GPUs, but you can make it much better on 10,000 GPUs. You will, in a lot of cases, always spend for the 10,000 GPUs or the 100,000 GPUs because if your coding model is even 20% better with that and you think that there are billions of people who could be using and engaging with that around the world, that’s actually worth it at that kind of cost. So, the fact that you’re trying to do efficiency — that’s a good thing. All of the American companies will also get to points where they’re focusing on efficiency. I think there are things that we can learn from some of the stuff the Chinese are doing.”
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For this article, we picked 10 AI stocks currently making moves on the back of the latest news. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Investors: 158
Stephen Weiss, the Chief Investment Officer and Managing Partner of Short Hills Capital Partners, said in a latest program on CNBC that tech companies’ recent announcements of higher Capex plans will bode well for Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM).
“All these capex announcements are great for Taiwan Semiconductor (NYSE:TSM).”
TSMC’s high-performance computing (HPC) revenue exceeded 50% for the full year of 2024, with HPC sales reaching 53% of total revenue in the fourth quarter. Smartphones contributed 35% in Q4, underscoring AI as the key growth driver for TSMC in the coming years.
At a forward EBITDA multiple of 11.2x, the stock does not seem overpriced. Compared to the tech sector median, TSM’s forward non-GAAP PEG ratio of 0.75 is significantly lower—about 60% below the peer average of 1.9.
Wedgewood Partners stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q4 2024 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was another top contributor to performance during the quarter and for the year. The Company’s earnings growth dramatically accelerated compared to last year as the Company’s wafer fabrication and packaging volumes soared in 2024. In addition, the Company customer prices rebounded in the face of more normalized capital expenditures. The Company maintains a near-monopoly in the fabrication of nearly every new AI accelerator brought to market over the past two years. They continue investing tens of billions to build and 7ill future capacity with orders for what seems to be insatiable hyperscale demand for accelerated computing. The stock ended the year trading at a consensus forward earnings multiple that is several points lower than large cap growth benchmarks, despite the Company’s dominant position in the most important industry that is driving one of the largest technological shifts in a generation.”
Overall, TSM ranks 4th on our list of top AI news you should pay attention to. While we acknowledge the potential of TSM, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
