We recently published a list of 10 Best Stocks to Buy for the Next 3 Months. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSMC) stands against other best stocks to buy for the next 3 months.
The year 2025 began with the surprise announcement of DeepSeek AI, launched in China, which shook the markets. Further volatility was experienced when the US government implemented trade tariffs across China and Europe. In March, President Trump suggested that his proposed reciprocal tariff regime would offer “flexibility”, giving investors some relief. Although it is unclear what the term “flexibility” would entail. Rising tensions from conflicts in the Middle East and Europe added to market uncertainty. Looking ahead, investors will be watching closely for fresh economic indicators to assess the Fed’s stance on future interest rates.
The hedge fund industry is seen as a trusted source of investment opportunities. According to a report published by Reuters, assets have grown by nearly 56% since 2015. The industry had $4.51 trillion in assets under management (AUM) in 2024, 9.75% higher compared to the previous year. Total assets were the highest amount since 2021, rising by $401.4 billion in 2024 due to strong performances across different strategies.
In terms of returns, hedge funds continued to show improvement year-on-year. As per a report by Pivotal Path, hedge funds returned 5.7% in 2023 and 10.7% in 2024, while some managers showed gains above 50%. This performance substantiates the industry’s influence on markets.
Looking ahead, the hedge fund landscape is poised for significant changes in 2025, driven by evolving market conditions, technological advancements, and shifting investor preferences. Mordor Intelligence predicts that the US Hedge Fund Market will have a market size of $2.95 trillion in 2025 and is expected to reach $4.05 trillion by 2030, a CAGR of 6.52%.
Hedge funds have introduced new strategies for mitigating market risks for improved returns to their investors. These include diversifying towards smaller multi-strategy funds. After a decade of fluctuating demand, smaller multi-strategy funds have begun to show interest. In 2024, with traditional asset classes facing challenges from rising P/E ratios and tight credit spreads, the uncorrelated returns of reinsurance-linked strategies have become increasingly attractive. This is expected to drive substantial capital inflows into the sector in 2025, particularly from institutional investors seeking diversification and higher returns. Investors who can assess the market dynamics, adapt to changes, and identify future leaders in the space are well-positioned for success. Hedge funds have the resources to use advanced AI-driven technologies to predict market movements to ensure higher returns on volatile asset classes.
Investors seeking to mitigate the impact of such volatility will opt for more stable, low-risk investments such as fixed-income securities. These provide a continuous stream of income in periods of high interest rates. In contrast, those willing to take advantage of high interest rates would opt for sectors benefiting from such a scenario, including banking, real estate, or tech firms, which are geared to take on high market volatility.
Our Methodology
The best stocks to buy over the next three months are chosen based on hedge fund sentiment toward these investments. For this list, we used Insider Monkey’s Q4 2024 proprietary hedge fund holdings database and identified the 10 most popular hedge fund stocks. The stocks are ranked in ascending order of their hedge fund positions.
At Insider Monkey, we are obsessed with hedge funds. 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).
A close-up of a complex network of integrated circuits used in logic semiconductors.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
No. of Hedge Fund Holders: 186
Upside Potential: 39.80%
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSMC) manufactures, packages, tests, and sells integrated circuits and other semiconductor devices globally, dominating the global foundry market with a 50% market share. The company achieved sales of $26.37 billion, up 33.10% YoY, beating estimates by $384.96 million. EPS was $2.24, managing to beat estimates by $0.02. It is among the best stocks to buy on our list.
Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSMC) stock price slumped earlier this year after the news of a Chinese AI company producing a more efficient AI model broke out (similar to all other tech giants). The share price stabilized in March, and analysts believe this creates a buying opportunity for investors who wish to jump on the chance to invest further.
The US government approved of trade tariffs on China, with TSMC’s representatives meeting with the legal council of the US Commerce Department and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSMC). The company’s representative had this to say:
“(TSMC) Comply with all applicable laws and regulations and is fully committed to complying with the new export control rules announced.”
Overall, TSMC ranks 6th on our list of best stocks to buy for the next 3 months. While we acknowledge the potential for TSMC 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 TSMC 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.