Longriver Partners Fund Highlights Taiwan Semiconductor Manufacturing as Key Player in AI Compute Stack

Longriver Partners Fund, a finance expert with experience at Bloomberg, highlighted Taiwan Semiconductor Manufacturing Company Limited (TSM) as the "lynchpin of the AI compute stack" in its Q2 2025 investor letter. The fund returned 11.7% (net) in the quarter, with TSM being a key contributor to its performance. The stock gained 25.66% in the last 52 weeks and has a market capitalization of $1.202 trillion.

Taiwan Semiconductor Manufacturing Company Limited (TSM) has emerged as a key player in the AI semiconductor industry, according to Longriver Partners Fund's Q2 2025 investor letter. The fund, led by a finance expert with experience at Bloomberg, highlighted TSM as the "lynchpin of the AI compute stack," contributing significantly to its 11.7% (net) return in the quarter. This performance underscores TSM's pivotal role in the AI ecosystem.

TSM reported a 39% year-over-year (YoY) surge in its second-quarter (Q2) sales, exceeding market expectations [1]. The growth is primarily attributed to sustained demand for AI-driven chips, bolstering optimism around the company's prospects. TSM supplies major clients such as Nvidia and Apple, further solidifying its position in the semiconductor industry [2].

The company's CEO, C.C. Wei, reaffirmed the strong demand for AI accelerators, projecting a doubling in revenue from these products in 2025. This growth is driven by advancements in AI infrastructure and the increasing need for cutting-edge chips in data centers and edge devices [3].

TSM's Q2 sales reflect the broader momentum of the AI ecosystem. The company's dominance in advanced nodes, particularly 3nm and 5nm chips, underscores its leadership in the AI supply chain. Key drivers include Nvidia's H100/H800 GPUs and AMD's AI chips, which are powered by TSMC's advanced nodes [3].

While TSM's Q2 results are encouraging, several risks loom on the horizon. Geopolitical tariffs and trade policies, rising competitive pressures from companies like Samsung, and potential macroeconomic slowdowns could impact the company's growth trajectory. However, TSM's strong market position and leadership in advanced nodes provide a buffer against these risks [3].

Investors should consider TSM as a core holding in their portfolios, given its pivotal role in the AI semiconductor cycle. Diversification through broad semiconductor ETFs and hedging with chip equipment stocks can help manage risks associated with TSM-specific investments [3].

In conclusion, TSM's record Q2 sales affirm that the AI semiconductor cycle is in full swing. The company's leadership in advanced nodes, coupled with sustained demand from hyperscalers and cloud providers, positions it to deliver years of growth. However, investors must monitor geopolitical developments, competitive advances, and macroeconomic trends to stay informed about potential risks.

References:
[1] https://ca.finance.yahoo.com/news/tsmc-posts-q2-sales-t-053645444.html
[2] https://seekingalpha.com/news/4466334-taiwan-semiconductors-q2-sales-rise-39-as-ai-demand-stays-strong
[3] https://www.ainvest.com/news/tsmc-s-q2-surge-a-beacon-of-ai-s-semiconductor-supercycle-250710102ead77813399a659/