We recently compiled a list of 17 trending AI stocks based on the latest news and analyst ratings, and in this article we’ll take a look at how Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands in relation to other trending AI stocks.
One of the biggest advances in artificial intelligence over the past few years has been advances in natural language processing. These AI models of language are now permeating the business world and society at large. An informed estimate by investment advisors at Goldman Sachs suggests that over the next decade, these AI tools could add 7% to global GDP, worth about $7 trillion, and boost productivity growth overall by 1.5 percentage points. Expert economists Joseph Briggs and Devesh Kodnani recently wrote in a report that the ability of AI tools to generate content indistinguishable from human-created output and break down communication barriers between humans and machines represents a major advancement that could have major macroeconomic effects.
Some of these macro factors are more identifiable in the form of numbers. A recent study on artificial intelligence by Stanford University in the United States revealed that companies have already surpassed academia when it comes to training AI models. For example, in 2023, the AI industry was able to train nearly 51 notable machine learning models (for more information on these companies, go to The 33 Most Important AI Companies to Watch), compared to just 15 for academia. This happened despite the rising costs associated with training models. For example, training ChatGPT 4, the latest version of the popular ChatGPT that made AI waves in late 2022, cost about $80 million. Similarly, the computational costs of Gemini Ultra, an AI tool developed by Google, were $191 million. The number of AI patents is also on the rise, evidenced by the fact that the number of granted AI patents has increased more than 31 times since 2010.
This exciting phase in the world of technology has brought a new boom to the global economy, which has been plagued by inflationary concerns, geopolitical conflicts, and sluggish demand. Bullish views on AI need to be balanced with caution. In the long term, investors need to prepare for major changes in how the world works, as AI could automate nearly 300 million jobs. Previous automation cycles have created new jobs and opportunities to replace them. Recognizing these opportunities in advance (read more by visiting 20 Industrial Stocks Already Riding the AI Wave) can go a long way in balancing the risk profile of a growth-oriented portfolio. A recent study found that 60% of the current workforce holds jobs that did not exist just half a century ago, lending credence to the claim that more than 80% of employment growth since then can be explained by technology-driven innovation.
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Our Methodology
In 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 stocks that hedge funds are flooding? The reason is simple: our research shows that you can outperform the market by mimicking the top picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small and large stocks every quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (more details here).
A close-up of the complex network of integrated circuits used in logic semiconductors.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of hedge fund holders: 135
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures and sells integrated circuits and semiconductors. These chips are used by some of the world’s largest technology companies, including Apple, NVIDIA, and Advanced Micro Devices. The Taiwan-based company is benefiting from the AI boom, and the demand for the products it sells is growing rapidly. One indicator of this is the latest revenue figures released by the company. The company’s revenue in July was about NT$257 billion, up more than 44% compared to July 2023. Revenue for the first seven months of this year was NT$1.5 trillion, up more than 30% compared to the same period in 2023.
Financial experts like Susquehanna analyst Mehdi Hosseini are bullish on Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) long-term growth prospects, with the analyst recently rating the stock positive and maintaining his target price at $250. Recent reports suggest the company will raise prices for its key 3nm and 5nm nodes in 2025. This hike will help the company beat analyst expectations for EPS in 2025, which currently stands at around $6.3, up around 21% year-over-year.
Based on the latest news and analyst ratings, TSM ranks #10 overall among trending AI stocks. While we acknowledge TSM’s potential as an investment, we believe some AI stocks have the potential to deliver higher returns in a shorter time frame. If you’re looking for AI stocks that are more promising than TSM but still trade for less than 5x TSM’s earnings, check out our report on the cheapest AI stocks.
Read next: Michael Burry is selling these stocks and Jim Cramer is recommending these stocks.
Disclosures: None. This article was originally published on Insider Monkey.
