We just covered Billionaire Dan Loeb Pivots to AI and Sells Old Economy Stocks: His Top 7 AI Picks. Taiwan Semiconductor (NYSE:TSM) ranks #1 (see Billionaire Dan Loeb’s Top 5 AI Stock Picks).
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 decad…. (Click Here to Read the Letter in Detail).”
Close-up of Silicon Die are being Extracted from Semiconductor Wafer and Attached to Substrate by Pick and Place Machine. Computer Chip Manufacturing at Fab. Semiconductor Packaging Process.
While we acknowledge the risk and 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 time frame. If you are looking for an AI stock that is more promising than TSM and that has 10,000% upside potential, check out our report about the cheapest AI stock.
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