Cathie Wood's Funds Buy 200,000 TSMC Shares Amid AI Boom

Cathie Wood, a prominent investor known for her aggressive bets on disruptive technologies, has made a significant move by purchasing a substantial amount of Taiwan Semiconductor Manufacturing Company (TSMC) American Depositary Receipts (ADRs). This purchase marks the largest single-day buy-in of TSMC ADRs by Wood's funds in nearly a year, signaling a shift from her previous strategy of primarily selling TSMC shares since the third quarter of last year.

Wood's flagship fund, Ark Innovation ETF, acquired 123,587 shares of TSMC ADRs on May 19, while the Ark Next Generation Internet ETF bought 74,189 shares. This acquisition represents 87% of the total TSMC shares held by Ark Invest as of the end of March. The move comes as a notable change in strategy, as Wood's funds had been predominantly selling TSMC shares since the third quarter of last year.

The timing of this purchase coincides with several positive developments in the market. The reduction in tariffs between the United States and China has significantly improved market sentiment. Additionally, a series of artificial intelligence agreements signed by Donald Trump with three Middle Eastern countries have bolstered TSMC's business prospects, as the company is a key supplier to NVIDIA.

TSMC's recent financial performance has also been robust. The company reported a 48.1% year-over-year increase in sales for April, reaching 349.57 billion New Taiwan dollars. This figure exceeded analyst expectations by 38% and marked an acceleration from the previous month's 46.5% year-over-year growth. The strong financial results, coupled with the positive market sentiment, have likely influenced Wood's decision to increase her holdings in TSMC.

Wood's investment strategy has been under scrutiny due to the underperformance of her flagship fund, Ark Innovation ETF, in recent years. Despite an 82% increase over the past two years, the fund remains 63% below its peak and has lagged behind the Nasdaq Composite Index for much of the past five years. This latest move to acquire a significant stake in TSMC could be seen as an attempt to revitalize the fund's performance by betting on a core company in the AI supply chain.

The purchase of TSMC shares by Wood's funds is part of a broader trend among prominent investors. Other notable figures, such as Stanley Druckenmiller and HH&H International Investment, have also increased their holdings in TSMC during the first quarter of this year. Druckenmiller, known as one of the greatest money-making machines in history, increased his TSMC holdings by 456.93%, while HH&H International Investment established a new position in the company.

Wood's decision to buy TSMC shares reflects her confidence in the company's future prospects and its role in the AI supply chain. As the demand for AI products continues to grow, driven by companies like Meta and Microsoft, TSMC's position as a leading semiconductor manufacturer is likely to remain strong. This strategic move by Wood could signal a broader shift in the investment community's view of TSMC and the semiconductor industry as a whole.