1. Taiwan Semiconductor (NYSE:TSM)
Harvard’s Stake: $232,102,708
Taiwan Semiconductor (NYSE:TSM) is the biggest holding of Harvard Management, as of the end of the first quarter.
TSMC is one of the biggest beneficiaries of the AI revolution. It manufactures the world’s most advanced semiconductors. Every major AI chip and high-performance processor is made in TSMC’s fabs. 74% of Taiwan Semiconductor’s (NYSE:TSM) wafer revenue comes from advanced nodes (7nm and below). No competitor can match TSMC at this scale.
This gives it a powerful and durable moat. New process technologies like A13 and N2U are already in development. TSMC is expected to stay ahead of rivals for years to come. Margins are expanding dramatically. Gross margin rose 7.4 percentage points year-over-year. Operating margin hit 58.1% in the latest quarter. Taiwan Semiconductor (NYSE:TSM) has significant pricing power. Costs are being managed very efficiently. Revenue growth is equally impressive. Q1 revenue jumped 40.6% year-over-year. For the full year, the company expects growth of over 30%. AI demand shows no signs of slowing down. Despite all this, the stock trades at a forward P/E of just 26. That is only a slight premium to the broader tech sector. The valuation is still below levels seen in late 2025. For the world’s most critical chip maker, that price looks very reasonable.
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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