1. Taiwan Semiconductor (NYSE:TSM)
Billionaire Dan Loeb’s Stake: 275,000 Shares Valued at Approximately $92.93 Million
Taiwan Semiconductor (NYSE:TSM) manufactures the physical chips designed by virtually every major semiconductor company in the world — Nvidia, Apple, AMD, Google, and Broadcom all rely on its fabs. TSMC benefits regardless of which chip architecture wins the AI race. Whether hyperscalers shift toward custom ASICs to reduce their Nvidia dependence, or stick with Nvidia GPUs, every one of those chips is fabricated on a TSMC wafer — meaning it captures volume from both sides of the competition simultaneously.
The 2nm node is where the next leg of growth comes from. It carries a wafer price reportedly above $30,000 — over 50% more expensive than the 3nm node it replaces — and is already seeing more customer tape-outs at this stage than any previous node in Taiwan Semiconductor’s (NYSE:TSM) history. Apple has already booked nearly half of initial 2nm capacity for the iPhone 18, with AMD, Intel, Qualcomm, and Broadcom all expected to follow. Q1 2026 gross margins hit a record 66.2%, prompting management to raise its long-term gross margin floor from 53% to 56%.
However, bears point to two risks. First, valuation — the stock trades at around 30x trailing earnings, near its 10-year peak. Second, and more importantly, over 90% of TSMC’s advanced node capacity sits in Taiwan, making any escalation in China-Taiwan tensions a permanent and unhedgeable overhang on the stock.
Green Alpha Investment stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q1 2026 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has commenced mass production of 2nm chips using nanosheet Gate-All-Around transistors—the most significant architectural leap in a decade—with initial yields already reaching 70-80%, well ahead of any competitor. The N2 node delivers a 15% performance boost at the same power or a 25-30% reduction in power consumption versus 3nm, and TSMC expects to reach 100,000 wafers per month of 2nm capacity by year-end 2026. Apple, NVIDIA, AMD, and Google have all secured capacity, and 2nm revenue is projected to surpass 3nm and 5nm combined by Q3 2026.
TSMC is effectively the world’s sole manufacturer of bleeding-edge silicon at scale, with 38% of the $320 billion global foundry market and a technology lead that Samsung and Intel cannot close in the near term. With $56 billion in planned 2026 capex and pricing power to raise wafer prices 5-10% across all sub-5nm nodes, TSMC’s competitive moat is widening, not narrowing. As AI workloads demand ever more advanced process nodes and advanced packaging (CoWoS capacity expanding 70%+ annually), TSMC sits at the absolute center of the AI compute supply chain.”
While we acknowledge the potential of TSM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than TSM and that has 100x upside potential, check out our report about the cheapest AI stock.
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