We recently published a list of Philippe Laffont Stock Portfolio: Top 10 Stock Picks. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against other stocks of Philippe Laffont’s Stock Portfolio.

Founded by Philippe Laffont, Coatue Management is a lifecycle investment platform that is focused on turning big ideas into world-shaping technology companies. Laffont established Coatue Management in 1999 and has earlier gained experience as a “Tiger Cub” while working at Julian Robertson’s Tiger Management hedge fund. The company makes investments across public and private markets and has a focus on technology, media, consumer, telecommunications and healthcare sectors. The company’s lifecycle investment platform expanded across venture, growth, thematic, and structured capital strategies.

Coatue’s Investment Approach

The company’s investment philosophy revolves around a technology-centric approach. This approach stems from the belief that technological innovation is the key factor fueling economic growth and it possesses the potential to disrupt traditional sectors.  As investors, the company tends to focus on seeking out the greatest innovators with the biggest ideas. The company has recently announced its continued deep partnership with Norm Ai by leading the latest investment. Norm Ai focuses on enabling regulated businesses to reap the benefits of the GenAI, with their government-grade regulatory AI product. Overall, the mission is to enable companies to do more, and yet maintain robust compliance scrutiny.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

Industrial Base is Expected to Transform, says Coatue

As per Coatue, for the much of 20^th century, the defense sector was responsible for technological breakthroughs – from the internet to GPS. However, in recent decades, its role as a key driver of innovation has diminished. That being said, the investment management firm said that the US industrial base is at a pivotal moment.  A wave of innovation has been emerging, fueled by new government initiatives, groundbreaking technologies, and an urgent need for modernization. The defense sector, which was once a sector not suitable for startups and innovators, is now opening. The firm believes that organizations and instruments, such as the Defense Innovation Unit (DIU) and Other Transaction Authorities (OTA), continue to accelerate the pace of partnerships between the government and private companies.

The disruptors believe that even the most entrenched systems could be transformed with the help of innovation, placing new standards for agility, cost-efficiency, and impact, says the investment firm. Overall, it expects the industrial base of the future to revolve around unmanned/autonomous systems, nuclear-powered energy, robotic manufacturing, and a completely new space economy.

Amidst these trends, we will now have a look at the Philippe Laffont Stock Portfolio: Top 10 Stock Picks.

Our Methodology

To list the Philippe Laffont Stock Portfolio: Top 10 Stock Picks, we selected the top 10 stocks in Coatue Management’s portfolio as per its Q4 2024 13F filing. We settled on the hedge fund’s 10 biggest holdings. Finally, we ranked the stocks in ascending order based on the value of Coatue Management’s equity stakes. Additionally, we have mentioned the hedge fund sentiment around each stock, as of Q4 2024.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Coatue Management’s Stake Value: $1.96 billion

Number of Hedge Fund Holders: 186

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) announced the intention to expand its investment in advanced semiconductor manufacturing in the US by an additional $100 billion. The company’s total investment in the US is expected to reach US$165 billion. Through the expansion, it expects to create hundreds of billions of dollars in semiconductor value for AI and other cutting-edge applications. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s business in Q4 was aided by healthy demand for the industry-leading 3nm and 5nm technologies.

Notably, in Q4 2024, shipments of 3-nanometer made up 26% of total wafer revenue and 5-nanometer accounted for 34%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 74% of total wafer revenue. In Q1 2025, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s business is expected to be impacted by smartphone seasonality, partially offset by continued growth in AI-related demand. Also, the ongoing AI boom demonstrates a healthy opportunity for the company’s long-term growth. AI applications need powerful and energy-efficient chips, which align perfectly with Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)’s advanced manufacturing capabilities.

Parnassus Investments, an investment management company, released the Q4 2024 investor letter. Here is what the fund said:

“Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) leading position in AI chip production continued to boost investor sentiment on the stock. During the year, moves by several large technology companies to increase their AI investments underscored demand for TSMC’s chips and supported the stock’s rise.”

Overall, TSM ranks 3rd on our list of top 10 stock picks of Philippe Laffont’s stock portfolio. While we acknowledge the potential of TSM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued 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.