Sands Capital Management, LLC released its Q1 2026 investor letter for its “Select Growth Strategy”. A copy of the letter is available to download here. Select Growth mainly targets leading U.S. businesses, driving positive structural changes. U.S. large-cap growth stocks fell in the first quarter. Sharp dispersion driven by AI advances marked the quarter, but late in the quarter, geopolitical tensions with Iran caused a broad-based risk-off move across the market. AI continued to influence market behavior, with AI-related investments increasing dispersion and shifting capital to asset-heavy sectors benefiting from AI infrastructure demand, which faced less disruption risk. While equities struggled, corporate fundamentals remained strong. Select Growth underperformed the Russell 1000 Growth Index, returning -12.9% vs. -9.8%, due to concerns about AI disruption affecting sector and stock choices. The Strategy’s focus on higher-growth, asset-light, service businesses faced challenges as markets rotated toward more capital-intensive, lower-risk sectors. Underweights in cyclical and defensive sectors slightly hurt relative results amid the broader market shift. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Sands Capital Select Growth Strategy highlighted Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as a notable performance contributor. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s leading contract chip manufacturer, producing advanced semiconductors for major global technology companies. On June 9, 2026, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) closed at $427.92 per share. One-month return of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was 7.03%, and its shares gained 99.87% over the past 52 weeks. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has a market capitalization of $2.22 trillion.
Sands Capital Select Growth Strategy stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q1 2026 investor letter:
“Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) latest results highlighted accelerating AI demand and reinforced the company’s position as a primary beneficiary of that trend. The update included two new data points that strengthened our outlook for AI accelerator demand. First, TSMC Chairman C.C. Wei said he personally spoke with the company’s largest hyperscaler AI customers and concluded that their requests for additional capacity were supported by end demand. Given TSMC’s historically conservative posture, we view this as a meaningful signal. Second, the company reinforced that confidence with a materially higher capital expenditure plan of $54 billion for 2026, well above consensus estimates of $47.8 billion, to support expected AI-driven demand. TSMC also reported results and issued guidance that exceeded our expectations and those of consensus. Management now expects AI-related revenue to grow at a 55 percent annualized rate through 2029, up from 45 percent previously, driven by both higher volumes and improved pricing. While peers continue to invest, we believe TSMC’s yields, scale, and surrounding ecosystem continue to differentiate it for high-performance GPUs and leading CPUs. Planned expansions in Arizona, including additional advanced fabs and a U.S.-based advanced packaging facility, should also ease prior capacity concerns.”
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is in 6th position on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 234 hedge fund portfolios held Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of the first quarter, up from 224 in the previous quarter. In Q1 2026, Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) revenue increased 6.4% (in U.S. dollar terms) sequentially to $35.9 billion, modestly exceeding the first quarter guidance. While we acknowledge the risk and potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE: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 Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and shared the list of best stocks to invest in according to billionaire Ken Griffin. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
