1. Taiwan Semiconductor (NYSE:TSM)
YTD Stock Performance: +33%
Philippe Laffont’s Stake: $2.62 Billion
Taiwan Semiconductor (NYSE:TSM) shares recently jumped after regulators in Taiwan eased limitations that would reportedly allow fund managers to increase their exposure to the stock. But beyond this news, what let’s see the fundamental growth drivers of the stock.
Taiwan Semiconductor (NYSE:TSM) is among the top beneficiaries of the rising AI CapEx that is likely to touch $700 billion. Why? TSM has about 62% of the total foundry market and over 90% of the market for advanced nodes (7nm and below). Taiwan Semiconductor’s (NYSE:TSM) customers don’t switch because finding other chip foundries is extremely hard, if not impossible.
Apple relies on Taiwan Semiconductor (NYSE:TSM) for chips, including for A-series and M-series. Taiwan Semiconductor makes AI GPUs for Nvidia used in data centers. AMD, Qualcomm, Broadcom, MediaTek and Marvell also rely on it for production.
Read what a Broadcom executive recently said about the demand Taiwan Semiconductor (NYSE:TSM) is facing here.
Taiwan Semiconductor Manufacturing (NYSE:TSM) has raised its capital expenditure forecast to $56 billion for 2026 and plans $165 billion in US investments over the next few years. Its moat and high-capacity production make it an attractive buy for the long term despite its gains.
Montaka Global Investments stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q1 2026 investor letter:
“We also acquired Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) – more commonly known as TSMC – the world’s effective monopolist in AI semiconductor fabrication.
Given Montaka’s deep work in AI over many years, we’ve been following this company for some time. We had previously opted against investing in TSMC because of over geopolitical tail risk concerns, and we continue to handicap this investment for its concentrated exposure to Taiwan.
That said, the combination of accelerating demand for AI compute, combined with limited opportunities to expand US electric power generation capacity, means enhanced power efficiency will likely be a primary source of compute capacity expansion for the world’s cloud computing hyperscalers. And this gives TSMC extreme pricing power that we believe continues to be underestimated.”
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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