We recently published a list of 10 Best Foreign Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against other best foreign stocks to invest in.
The global economy demonstrated resilience in 2024, maintaining a steady annualized growth rate of 3.2% in the latter half of the year. However, recent economic indicators suggest that global growth may be losing momentum. The OECD forecasts that global growth will be 3.1% in 2025 and 3% in 2026, compared to 3.2% in 2024. The marginal fall in growth is because of rising trade restrictions across economies, strict policy updates that often upend investment opportunities, and uncertain household spending. Although growth in the United States has been very strong as of late, it is expected to slow down to 2.2% this year and 1.6% in 2026. Economic growth will be weak in the Euro Zone as well, with OECD projecting real GDP growth of 1.0% in 2025 and 1.2% in 2026. China follows a similar trend, with growth declining to 4.4% in 2026 from 4.8% in the current year.
In the midst of stagnant global economic forecasts, Michael Hartnett, an analyst at Bank of America, cautioned investors that the United States stock market is coming off its recent highs, and is no longer benefiting from high fiscal spending, lenient immigration policies, and robust AI budgets. The analyst noted that Chinese competitors are now successfully producing large language models for under $6 million, which is a fraction of the billions spent by American firms to create the same tech. Similarly, Manish Kabra of Societe Generale observed that Chinese developments in AI are disrupting investor confidence and making them question spending by American tech firms.
BofA’s Michael Hartnett noted that investors are not paying attention to foreign markets like Japan and Europe, where stocks are cheaper, and value stocks are ahead of their growth counterparts. He pointed out that Japan’s Nikkei 225 has climbed 9% in the past year, while the European index displayed outperformance at the beginning of 2025.
Others also share a similar sentiment about foreign stocks. For example, David Herro, partner and portfolio manager at Harris Associates, joined CNBC on January 15, 2025, and commented that US stocks are largely overvalued, so it is only logical to look for opportunities elsewhere. This is where foreign markets come into play. According to Herro, fundamentals of overseas stocks are okay, and while they may not be robust, these stocks are growing in mid-single digits with attractive valuations. These valuation characteristics make it almost impossible not to consider these foreign stocks and increase international portfolio exposure. He noted that companies based out of Europe are not just doing business there, but their operations are spread worldwide. For cheap valuations, this is a huge plus. For long-term investors, he suggested that they should mainly focus on company fundamentals rather than the macroeconomic environment that they operate in because that’s how you make money.
A close-up of a complex network of integrated circuits used in logic semiconductors.
Our Methodology
For this article, we referred to Insider Monkey’s database containing billionaires’ stock picks and chose the top 10 companies headquartered outside the United States that were most popular with billionaire investors in Q4 of 2024. We have also mentioned the value of billionaire holdings for further insight. The stocks are ranked in ascending order based on the number of billionaire investors.
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)
Number of Billionaire Investors: 30
Value of Billionaire Holdings: $14.62 billion
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the largest pure-play semiconductor company in the world. On January 21, investment advisory Bernstein assigned TSM an Outperform rating with a price target of $258. The firm observed that robust AI demand and a forecasted revenue growth of 27% in FY2025 are positive catalysts for the company. Semiconductor prices are also stabilizing, which will benefit TSM. It is one of the best foreign stocks to buy according to billionaires. In Q4, TSM was found in 30 billionaire stock portfolios.
On March 4, Taiwan Semiconductor Manufacturing (NYSE:TSM) announced a plan to invest $100 billion in the United States. The company plans to build five new chip facilities so there is less dependence on Asian semiconductor production. TSM aims to construct three fabrication plants in the US to expand operations, as well as two packaging facilities and a research and development unit. TSM made an earlier commitment to invest $65 billion in the US and build a third Arizona factory by 2030.
In the fourth quarter of 2024, the company earned a revenue of $26.88 billion, up 37% year-over-year and 14.4% from the last quarter. Taiwan Semiconductor Manufacturing (NYSE:TSM)recorded a profit margin of 43.1%, driven by solid demand for its advanced 3nm and 5nm chips, which accounted for 60% of overall wafer revenue. While the company expects a revenue dip in Q1 2025 due to slower smartphone sales, it will be offset by growing demand for AI.
Overall, TSM ranks 1st on our list of the best foreign stocks to buy according to billionaires. While we acknowledge the potential of TSM to grow, our conviction lies in the belief that certain 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 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.