Taiwan Semiconductor (TSM): Why Billionaire Chase Coleman’s Big Bet on the Chip Giant Could Pay Off in 2025

The semiconductor industry is the backbone of the digital age, and Taiwan Semiconductor Manufacturing Company (TSM) is its crown jewel. In 2025, billionaire hedge fund manager Chase Coleman of Tiger Global Management doubled down on TSM, increasing his stake to $717.87 million—a clear vote of confidence in the company’s ability to capitalize on the AI revolution. But why now? Let’s unpack the factors making TSM a top pick for one of the world’s shrewdest investors.

The AI Boom: TSM’s Engine of Growth

At the heart of TSM’s appeal is its dominance in advanced chip manufacturing, a critical enabler of artificial intelligence. The company’s 3-nanometer (3nm) and upcoming 2nm processes are game-changers. For instance, its 2nm chips consume 25-30% less energy than 3nm equivalents, a vital advantage for data centers powering AI models. Analysts at Bernstein estimate AI-related revenue will triple by 2025, accounting for a mid-teens percentage of TSM’s total revenue.

Coleman’s bet isn’t just about cutting-edge tech—it’s about scale. TSM’s A14 logic process technology, designed for high-performance computing, is already in demand for cloud infrastructure and autonomous systems. With AI spending expected to hit $1.3 trillion annually by 2030 (McKinsey), TSM is positioned to capture a significant slice of this pie.

A Fortress Balance Sheet and Client Loyalty

TSM’s financials are equally compelling. Despite a 18% dip in early 2025, Q1 revenue surged 42% year-over-year to NT$839 billion, outpacing even the most bullish estimates. The company’s guidance of a 15-20% long-term revenue CAGR is backed by its diversified client roster. Apple, Qualcomm, AMD, and Nvidia rely on TSM to manufacture chips for everything from iPhones to AI accelerators.

This neutrality—TSM doesn’t compete with clients—is a strategic moat. Unlike Intel, which designs and manufactures its own chips, TSM focuses solely on production, ensuring it remains the go-to partner for tech giants.

Valuation: A Bargain in a Growth Stock?

With a forward P/E of 26x, TSM trades at a slight premium to the S&P 500 (23.5x). But this multiple is justified: Bernstein’s $251 price target implies a 32.84% upside from current levels, reflecting TSM’s growth trajectory. Meanwhile, competitors like Intel trade at just 15x forward earnings but lack TSM’s technological edge.

Coleman’s strategy? Buy the dip. He’s not fazed by short-term volatility, viewing market corrections as opportunities to add to his position. His confidence is backed by TSM’s order backlog and the irreplaceable role it plays in the global tech supply chain.

Risks and Realities

No investment is risk-free. The AI “bubble” could burst, and broader tech sector pullbacks (the Nasdaq fell 8% in early 2025) might pressure TSM’s stock. However, TSM’s diversified revenue streams—spanning consumer electronics, automotive, and HPC—mitigate this risk. Even in a downturn, its clients will keep upgrading to more efficient chips.

Conclusion: A Chip Giant with a Decade-Long Runway

TSM isn’t just a play on AI—it’s a structural winner in the semiconductor industry. With a 32.84% upside target, a 15-20% CAGR, and a fortress balance sheet, it’s no wonder Coleman has allocated 2.8% of his portfolio to this stock. The data is clear: TSM’s advanced nodes, client loyalty, and AI-driven demand create a rare combination of sustainability and scalability.

For investors willing to ride out short-term noise, TSM offers a rare chance to invest in the backbone of the next tech revolution. As Coleman once said, “The best time to plant a tree was 20 years ago. The second-best time is now.” In 2025, TSM is that tree.

Data as of Q1 2025. Past performance does not guarantee future results.