Goldman Sachs’ Best Hedge Fund Stock Picks: Top 20 Stocks

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

Number of Hedge Fund Investors in Q2 2024: 156

GS’ Number Of Funds: 30

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest contract chip manufacturing firm. The multi billion dollar investments required to set up leading edge chip fabrication foundries coupled with decades of technical research and expertise provide Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) with one of the biggest moats in its industries. The firm is currently manufacturing the most advanced chips in the world which are marketed as 3-nanometer or N3. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) enjoys multiple catalysts due to its capability to produce defect free chips at scale. For instance, it is Apple’s sole manufacturer for Apple’s in house processors, and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is also a key NVIDIA partner for not only making AI GPUs but also providing the technologies to assemble them into a usable format. These technologies are called packaging technologies, and they have also proven to be the biggest constraint in AI chip supply – making Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) spend copious amounts of capital to expand production. However, the firm’s location in Taiwan leaves it vulernable to geopolitical conflict in the region and remains the biggest long term risk.

ClearBridge Investments mentioned Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2024 investor letter. Here is what the firm said:

“However, we added to our semiconductor positioning during the quarter with the purchase of Taiwan Semiconductor (TSM). TSM, an out-of-benchmark name, is the world’s fabrication production provider of choice. The criticality and sophistication of the company’s 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.”