Taiwan Semiconductor: The Bedrock of the AI Revolution and Ken Fisher’s Hidden Gem

In a world increasingly powered by artificial intelligence and advanced computing, few companies are as vital to the global tech ecosystem as Taiwan Semiconductor Manufacturing Company Limited (TSM). As the semiconductor giant’s stock nears historic highs, investors are taking note—not least among them, Ken Fisher, whose firm has staked billions on TSM’s future. But is this a bet on long-term resilience or a fleeting opportunity? Let’s dissect the data.

The Case for TSM: Fisher’s Strategic Play

Ken Fisher’s portfolio positions TSM as a core holding, with a $5.6 billion stake representing 2.22% of his fund’s assets. While not his top pick, TSM’s role as the world’s leading foundry—a dedicated chipmaker for competitors like Apple, NVIDIA, and AMD—gives it an irreplaceable niche. Fisher’s confidence is underscored by TSM’s 33.41% upside potential projected through April 2025, driven by its dominance in advanced chip fabrication.

The Financial Foundation: Growth Amid Global Volatility

TSM’s Q1 2025 results were a masterclass in resilience. Despite a 5.1% sequential revenue dip to $25.53 billion, the year-over-year jump of 35.3% reflects the enduring demand for cutting-edge chips. Profit margins are equally compelling: a 58.8% gross margin, 48.5% operating margin, and 43.1% net profit margin highlight operational efficiency. The real story, however, lies in advanced nodes like 3nm chips, which now account for 22% of wafer revenue, up from 14% a year ago. With 5nm and 7nm chips contributing another 51%, TSM is the clear leader in the architectures powering AI, 5G, and autonomous systems.

The AI Boom: TSM’s Lifeline

The AI revolution is TSM’s golden opportunity. Management expects AI-related revenue to more than triple in 2025, fueled by demand for high-performance GPUs and processors. To capitalize, TSM is doubling down on capacity: a $100 billion expansion plan (in addition to a preexisting $65 billion investment) aims to boost U.S. manufacturing, shielding it from geopolitical risks tied to Taiwan. The company’s 45% five-year CAGR projection for AI-related sales isn’t just ambitious—it’s essential in a market where AI infrastructure spending could hit $1 trillion by 2030.

Navigating Geopolitical Crosswinds

No discussion of TSM is complete without addressing the elephant in the room: Taiwan’s status as a geopolitical lightning rod. While Middle Coast Investing halved its TSM stake due to China-Taiwan tensions, Fisher’s firm remains bullish. Their rationale? Supply chain resilience trumps short-term noise. Even if U.S.-China trade disputes escalate—say, tariffs jump to 50%—historical data shows such measures rarely cripple TSM’s margins. As Fisher’s analysts note, tariffs have minimal impact on profitability because TSM’s pricing power and client reliance on its technology offset costs.

The AI vs. TSM Dilemma

Yet TSM’s long-term appeal contrasts with the siren song of AI stocks, which Fisher’s portfolio also emphasizes. While TSM’s 33.41% upside is substantial, some AI chipmakers—like the unnamed “cheapest AI stock” trading at <5x earnings—promise faster gains. This isn’t a contradiction: TSM is the infrastructure underpinning AI, whereas pure-play AI companies are the engines. Both are critical, but investors must choose their time horizon.

Conclusion: A Foundation for the Future

TSM isn’t just a stock—it’s a bet on the future of technology. With 62% global foundry market share, $25.53 billion in quarterly revenue, and $100 billion in planned investments, TSM is the backbone of the AI era. While geopolitical risks and trade tensions loom, Fisher’s data-driven approach dismisses these as manageable headwinds.

The numbers speak plainly: TSM’s 38% YoY revenue growth expected in Q2 2025, its 22% contribution from 3nm chips, and its $5.6 billion equity stake in Fisher’s portfolio all point to a stock primed for sustained growth. For investors willing to look beyond quarterly noise, TSM isn’t just a hidden gem—it’s a generational opportunity.

In a world racing toward AI, the company that makes the chips that make it possible can’t be ignored.