We recently published a list of 17 Trending AI Stocks on Latest Analyst Ratings and News. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against the other trending AI stocks.
The AI industry continues to be highly dynamic, with significant growth anticipated across various sectors in 2024. The expansion of generative AI, which saw exponential growth in 2023, is expected to continue this year, potentially unlocking trillions of dollars in value as businesses move from pilot projects to broader implementation. This shift suggests that 2024 will be a pivotal year for AI as companies aim to leverage capabilities more fully to drive efficiency, reduce costs, and innovate across different industries. The market for generative AI is forecasted to grow rapidly, with a compound annual growth rate of close to 60%, reaching a valuation of around $37 billion by 2028. This growth is fueled by the widespread adoption of AI technologies in areas such as healthcare, finance, and customer service.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and Billionaire Druckenmiller is Betting on AI
The AI revolution is already transforming operations across the world by automating tasks, analyzing large datasets, and enhancing predictive capabilities. The healthcare sector, for example, is poised for substantial advancements due to AI, with the market expected to grow to around $188 billion by 2030, driven by innovations in genomics, drug discovery, and personalized medicine. Edge computing is another area likely to see significant development in 2024, as it becomes increasingly critical for enabling AI applications that require real-time data processing. The move towards edge computing, where data is processed closer to the source, is expected to reduce latency and improve the performance of AI systems, particularly in sectors like autonomous vehicles, IoT, and industrial automation.
This trend underscores the growing importance of a robust semiconductor supply chain, especially as global trade tensions and geopolitical events continue to impact the availability of critical components like chips. Experts also emphasize the growing importance of ethical considerations and responsible AI. As AI technologies become more deeply embedded in various aspects of society, concerns around privacy, bias, and security are likely to intensify, prompting calls for clearer regulatory frameworks and guidelines to ensure that AI is developed and deployed responsibly. The rapid growth will also bring challenges related to talent acquisition, supply chain management, and the need for responsible AI practices. As such, the industry is likely to be marked by both tremendous opportunities and complex challenges in the near term.
READ ALSO 10 Best Small-Cap AI Stocks to Buy and 10 Tech Stocks to Monitor Amid Market Volatility According to Bernstein Analyst.
Our Methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among hedge funds. 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 Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. The firm is well positioned to benefit from the AI wave as companies rollout AI features on devices like smartphones and computers, the two end markets that TSM dominates. The bulk of the net revenue of the firm is generated by these two markets. The smartphones division accounts for 33% of the net revenue while the computing division makes up 52% of the net revenue. Some of the largest customers of the firm include famous names like Apple, NVIDIA, Intel, AMD, Qualcomm, and MediaTek, among others. Through these firms, the company has a 61% market share in the foundry business.
As the US ramps up efforts to manufacture chips inside the country, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) had announced plans to build a facility on the outskirts of Phoenix back in May 2020 for this purpose. The New York Times reports that the project, estimated to cost more than $70 billion, has still yet to fully take off, with TSM not selling semis made at the facility yet.
Overall, TSM ranks 13th on our list of our list of trending AI stocks on latest analyst ratings and news. While we acknowledge the potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE: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 timeframe. If you are looking for an AI stock that is more promising than Taiwan Semiconductor Manufacturing Company Limited (NYSE: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 was originally published at Insider Monkey.
