We recently compiled a list of the 10 Unrivaled Stocks of the Next 5 Years. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against the other unrivaled stocks.
In the first week of February, the market experienced little changes as investors analyzed earnings reports from big tech companies, a better-than-anticipated January jobs report, and updates regarding President Trump’s tariff policies. According to Josh Schafer, Yahoo Finance Markets team, the S&P 500 remained almost unchanged for the week, while the Nasdaq Composite and Dow Jones Industrial Average decreased 0.4%.
Schafer noted that over 62% of S&P 500 companies are done reporting their earnings and the year-over-year growth rate for the index keeps rising. As of February 7, the S&P 500 was on track for earnings growth of 16.4% compared to the previous year. This exceeds the 11.8% earnings growth analysts had projected at the start of January and it would also mark the fastest pace of growth rate in three years.
READ ALSO: 10 Best Stocks to Buy and Hold For 2025 and 10 Best Low Priced Technology Stocks To Buy Now.
The January jobs report, released on Friday, February 7, highlighted resilience in the labor market with an unexpected fall in the unemployment rate and higher-than-expected wage growth. Additionally, December’s monthly job gains saw an upward revision that showed the US labor market ended the year 2024 in a better position than previously reported. This led economists to argue that the Federal Reserve will not be cutting interest rates in the near future. As a result, this puts more pressure on inflation data to cool down before the central bank considers reducing borrowing costs.
The Consumer Price Index (CPI) is set to be released in the second week of February on the morning of Wednesday. Investors are also expected to be paying close attention to President Trump’s planned announcement of new 25% tariffs on steel and aluminum imports and for additional details on reciprocal duties across the board.
Methodology
To compile our list of the 10 unrivaled stocks of the next 5 years, we sifted through our own rankings, financial media reports, ETFs, and various online resources. We used search phrases like “unrivaled stocks” and “wide moat stocks” to compile a list of the best unrivaled stocks. From an initial list of over 25 stocks, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 10 unrivaled stocks of the next 5 years were then ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
Why do we care about what hedge funds do? 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).
A close-up of a complex network of integrated circuits used in logic semiconductors.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 158
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a Taiwanese company that designs and manufactures semiconductors. The company deploys distinct process technologies to manufacture products for various applications that cover a range of end markets including high-performance computing, smartphones, the Internet of Things (IoT), automotive, and digital consumer electronics. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) holds a significant market share in contract chip manufacturing and advanced chip manufacturing.
Wedgewood Partners, an investment management company, discussed Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q4 2024 investor letter. The letter noted that TSMC has maintained a near-monopoly in the fabrication of almost every new AI accelerator introduced in the market over the last couple of years. The investment management firm also noted that Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) continues to invest heavily to expand its capacity as the demand for accelerated computing is surging.
The company is focused on expanding its manufacturing footprint to address the rising demand for semiconductors. In 2024, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) began construction on a semiconductor fabrication plant in Dresden, Germany. The new facility will be designed for the production of TSMC’s 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technologies. With production expected to start in 2027, the Dresden facility will bring TSMC’s advanced manufacturing capabilities to more customers in Europe.
Overall, TSM ranks 7th on our list of the unrivaled stocks of the next 5 years. While we acknowledge the potential of TSM as an investment, our conviction lies in the belief that some 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.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
