We recently compiled a list of the 20 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.
Global management consulting firm Bain & Company recently released a report on the artificial intelligence industry, highlighting that AI was driving an unprecedented wave of technological change, with the market for AI products and services projected to reach between $780 billion and $990 billion by 2027. Per the research done by Bain, major cloud services providers were at the forefront of AI research and development, pushing the boundaries of larger models, advanced infrastructure, and energy efficiency. These hyperscalers were focusing on the development of larger, more complex models that demanded significant computational power and resources, leading to the need for data centers with energy capacities up to gigawatts, potentially straining energy grids and supply chains.
Read more about these developments by accessing 30 Most Important AI Stocks According to BlackRock and AI News You Should Not Have Missed.
Bain underlined that while the big players dominated the high end of the market with expansive models and enormous data centers, innovation was also thriving in smaller models. These smaller, domain-specific models were being deployed at the edge, where they were more cost-effective, energy-efficient, and capable of addressing real-time processing needs, particularly in applications like autonomous driving. The proliferation of models like Llama, Claude, and Gemini illustrated how AI was evolving rapidly beyond just a few proprietary models, with many options now open-source or specialized for particular tasks.
The research further detailed that the rapid growth in AI workloads, particularly with data-heavy applications, was also reshaping the technology landscape. The need for increased storage, computing power, and memory was driving innovations in data center design, networking, and storage technologies. Per Bain, chip companies and particularly GPU makers were expanding beyond their core graphics processing units to include integrated solutions that improved the efficiency of AI models, with their products now combining compute, memory, and networking capabilities. The competition was also spurring the development of vertically integrated AI solutions, where tech companies designed everything from hardware to software to optimize AI performance.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
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).
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: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. Wall Street analysts have acknowledged the technological superiority that the chipmaker has over rivals as far as the United States. Northland recently underlined in an investor note on TSM rival Intel that the US military had no alternative to TSM for advanced logic chips, even though the Department of Defense required that the chips they use be manufactured on US soil.
Finance experts like Susquehanna analyst Mehdi Hosseini are bullish on the long-term growth prospects of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), with the analyst recently maintaining a Positive rating on the stock with a price target of $250. Recent reports indicate that the firm will raise prices on key 3nm and 5nm nodes in 2025. This rise should help the firm beat analyst expectations on 2025 EPS, which presently sit around $6.3, up nearly 21% on a year-on-year basis.
Overall TSM ranks 12th on our list of the trending AI stocks. 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 timeframe. 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.
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Disclosure: None. This article is originally published at Insider Monkey.
