Billionaire Phillipe Laffont’s Top 10 “Mostly AI” Stock Picks

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

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as the biggest foundry enjoys over 50% market share with some of the world’s most advanced chips in its arsenal, including 2nm and 3nm nodes. It supplies chips to major players like Apple (AAPL), Qualcomm (QCOM), and Nvidia (NVDA). However, analysts have lowered its valuation on the premise that its business could be affected by any future possible conflict between China and Taiwan as it relies heavily on international supply chains. Philippe Laffont cited this geopolitical risk in his interview saying “That Capex of TSM is in Taiwan, and so at the leading edge a lot of capacity is in one very small area. Forget that it’s just in China, it’s in a very small area. I think that’s very risky.” Nevertheless, Bank of America Brad Lin increased the earnings and price target estimate since he believes that TSMC is the “key beneficiary and enabler of AI prosperity.”

Among the hedge funds being tracked by Insider Monkey, Fisher Asset Management is a leading shareholder in Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) with 29 million shares worth more than $3 billion. Philippe Laffont’s fund holds 10 million shares worth $1.4 billion.

Baron Emerging Markets Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its first quarter 2024 investor letter:

“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) contributed in the first quarter due to investor expectations for a continued strong cyclical recovery in semiconductors and significant incremental demand for AI chips. We retain conviction that Taiwan Semiconductor’s technological leadership, pricing power, and exposure to secular growth markets, including high-performance computing, automotive, 5G, and IoT, will allow the company to sustain strong double-digit earnings growth over the next several years.”