We recently published a list of 16 Trending AI Stocks on Latest Analyst Ratings and News. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against the other trending AI stocks.
In recent months, the AI industry has been presenting explosive opportunities in the development and deployment of AI infrastructure. Companies that provide AI chips, cloud services, and data storage solutions are poised to benefit from the growing demand for AI capabilities. For example, NVIDIA, a leading provider of AI chips, has seen the shares rally by 160% in 2024, driven by the increasing need for powerful processing capabilities in AI applications. Similarly, cloud service providers like Amazon Web Services and Microsoft Azure are seeing a surge in demand for their AI and machine learning services, making them attractive options for investors.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
However, in this buzz around the new tech, investors should also stop and consider some of the risks and challenges associated with AI. Regulatory scrutiny on AI firms is intensifying, particularly around issues of data privacy, algorithmic bias, and the ethical use of AI. Governments worldwide are beginning to implement regulations that could impact how AI technologies are developed and deployed. For instance, the European Union has proposed an AI Act that seeks to create a regulatory framework that addresses the risks associated with AI while promoting innovation. This regulatory environment could lead to increased compliance costs and slower adoption rates in certain sectors, posing a potential risk for investors.
Another critical consideration for investors is the talent shortage in the AI industry. The demand for skilled AI professionals far outstrips supply, leading to fierce competition among companies for top talent. This talent gap could slow down the development and deployment of AI technologies, particularly in smaller companies that may not have the resources to compete with tech giants like Google and Microsoft for talent. Despite these challenges, the overall outlook for the AI industry remains highly positive. The continuous advancements in AI technologies, coupled with their increasing integration into various sectors, provide a strong foundation for future growth.
Read more about these developments by accessing Billionaire Stan Druckenmiller Is Betting On AI Infrastructure, Tobacco and Industrial Stocks and 10 Tech Stocks to Monitor Amid Market Volatility According to Bernstein Analyst.
Our Methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular among 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician in a lab coat soldering chipsets to power the company’s infotainment head units.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 156
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) makes and sells integrated circuits and semiconductors. The company is spending upwards of $30 billion on AI-related capex this year. For investors who follow the firm, this kind of spending is historically associated with higher growth opportunities for the chip maker in the following years. In the coming months, the firm expects strong AI-related demand underpinned by the industry megatrend of AI, HPC, and 5G. The AI chips being made by the firm are being used on devices made by leading firms like Apple and Samsung.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a Wall Street darling. JPMorgan recently raised the price target on the stock to NT$1,200 from NT$1,080 and kept an Overweight rating, highlighting that the company was now firmly on course to improve margins in the next few years, with continued strong demand for artificial intelligence acting as an accelerator.
Overall, TSM ranks 12th on our list of trending AI stocks on latest analyst ratings and news. While we acknowledge the 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 timeframe. If you are looking for an AI stock that is more promising than Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
