We recently compiled a list of the 15 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.
The AI industry has been experiencing explosive growth, making it a highly attractive sector for potential investors. According to a report by Bloomberg Intelligence, the global generative AI market was valued at approximately $40 billion in 2022, just before the launch of ChatGPT, and is now expected to expand at a compound annual growth rate of more than 40% to reach over $1.3 trillion in size within the next decade. This growth is fueled by the rapid adoption of AI technologies across various industries, including healthcare, finance, retail, and manufacturing, where AI is being leveraged to enhance efficiency, reduce costs, and create new revenue streams. For instance, in healthcare, AI-driven diagnostics and personalized medicine are revolutionizing patient care, leading to more accurate and timely treatments. The finance sector is also reaping the benefits of AI through advanced algorithms for fraud detection, risk management, and personalized banking services.
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.
The AI market is not just expanding in terms of applications but also geographically. North America has been a dominant force in AI development, with companies like Google, Microsoft, and Amazon leading the charge. However, Asia-Pacific, particularly China, is rapidly catching up, driven by significant investments and a robust government push toward AI adoption. The Chinese government has an ambitious AI plan aimed to make the country a global leader in AI by 2030, with projections that the AI industry of China could reach $150 billion in size by then. This geographical diversification is crucial for investors looking to tap into different markets and reduce their risk exposure.
Investors should also consider the substantial investments being made in AI startups, which are critical drivers of innovation. According to CB Insights, AI startups raised over $66 billion in funding in 2022, marking a record year despite broader economic uncertainties. This trend is expected to continue as more venture capital firms and corporate investors recognize the potential of AI to disrupt traditional industries. Furthermore, the integration of AI with other emerging technologies, such as the Internet of Things (IoT), 5G, and quantum computing, is likely to create new opportunities and markets, further driving growth.
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 close-up of a complex network of integrated circuits used in logic semiconductors.
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. AI investors can take a lot of positives from the company. For example, it has a 28% market share in the foundry business, underscoring the importance of the firm as the AI boom drives the demand for high-end chips that need fabrication as part of their manufacturing process. The recent purchase of a manufacturing plant worth $530 million will double fab capacity by 2025. The firm also plans to spend close to $30 billion in capital expenditures this year, the majority of which is marked for investments in advanced technologies, highlighting the commitment it has to chip leadership in an AI world.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has received bullish calls from analysts on Wall Street in recent weeks. For example, investment advisory JPMorgan has an Overweight rating on the shares with a price target of NT$1,200. In a recent note, the advisory stated that TSM is now firmly on course to improving margins in the next few years in light of the market leading position with continued strong demand for artificial intelligence.
Overall TSM ranks 12th on our list of the trending AI stocks on latest analyst ratings and news. While we acknowledge the potential of 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 TSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: Michael Burry Is Selling These Stocks and Jim Cramer is Recommending These Stocks.
Disclosure: None. This article is originally published at Insider Monkey.