Taiwan Semiconductor Manufacturing Company, Ltd. (TSM) Slid on Weakening AI Sentiment

Ariel Investments, an investment management company, released its “Ariel Global Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter of 2025, investors challenged the idea of “American exceptionalism.” After record highs in January, U.S. markets fell due to tariff fears and policy uncertainty, with the Magnificent Seven dropping nearly 15% due to concerns over America’s AI leadership. Meanwhile, international equity markets outperformed the U.S. in their strongest quarterly showing in 15 years. Against this backdrop, the Ariel Global fund traded +6.31% higher in the quarter, compared to the -1.32% return of its primary benchmark, the MSCI ACWI Index, and the +4.77% return of its secondary benchmark, the MSCI ACWI Value Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Ariel Global Fund highlighted stocks such as Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures, packages, tests, and sells integrated circuits and other semiconductor devices. The one-month return of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was 11.49%, and its shares gained 20.03% of their value over the last 52 weeks. On June 16, 2025, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stock closed at $215.68 per share, with a market capitalization of $1.119 trillion.

Ariel Global Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q1 2025 investor letter:

“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) shares declined on weakening sentiment regarding Artificial Intelligence (AI) growth, the impact of tariffs and global macroeconomic uncertainty. TSMC has a dominant share of the global foundry market and is an industry leader in terms of scale, technology, customer service and execution. As such, we expect the company’s earnings will benefit from secular growth trends of AI longer-term. Meanwhile, TSMC remains committed to returning capital to shareholders through buybacks and dividends.”

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is in 9th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 187 hedge fund portfolios held Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of the first quarter, which was 186 in the previous quarter. While we acknowledge the potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and shared the list of best stocks to buy for beginners. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of TSM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.