Why TSMC Is Still the Best Bet in the AI Revolution

The AI revolution is no longer a distant promise—it's a present-day reality reshaping industries, economies, and global supply chains. At the heart of this transformation lies one company: TSMC (Taiwan Semiconductor Manufacturing Co.). As the world's largest and most advanced contract chipmaker, TSMC is not just a participant in the AI boom; it is the linchpin. With billionaire investors and institutional money increasingly aligning with its trajectory, TSMC's strategic positioning and financial resilience make it a compelling long-term bet for investors navigating the tech-driven future.

Billionaire Moves Signal Confidence (and Caution)

TSMC's stock has been a magnet for high-net-worth investors and hedge fund titans, reflecting its dual role as a cash cow and a strategic asset. In 2024 and 2025, (Duquense Family Office) and (Fisher Asset Management) both increased their stakes, with Druckenmiller boosting his position by 28% in Q2 2025. Fisher's $4.99 billion holding underscores TSMC's blue-chip status, while Druckenmiller's move highlights his belief in the company's ability to dominate AI-driven demand.

Meanwhile, (Tiger Global) and (Point72) added to their positions in Q3 2024, betting on TSMC's leadership in advanced node manufacturing. These investors see TSMC as a gateway to the AI infrastructure boom, particularly as demand for 3nm and 2nm chips accelerates.

However, not all billionaire moves are bullish. (Appaloosa Management) reduced his TSMC stake in 2024, opting to take profits after the stock surged 46.5% year-over-year. Yet, Tepper's pivot to Broadcom—a diversified tech giant—suggests he still sees value in the broader AI ecosystem, just not in TSMC's near-term trajectory. This divergence highlights a key insight: while some investors are harvesting gains, others are doubling down, signaling a mix of caution and conviction.

Fundamental Analysis: Why TSMC's Dominance Is Unshakable

TSMC's appeal isn't just about investor sentiment—it's rooted in hard metrics. In Q2 2025, the company reported NT$933.79 billion ($30.1 billion) in revenue, a 38.65% year-over-year jump, with AI and high-performance computing (HPC) chips accounting for 60% of total revenue. This growth is fueled by TSMC's near-monopoly on advanced semiconductor nodes: 3nm, 5nm, and 7nm processes now represent 74% of its wafer revenue.

Strategic Partnerships and Technological Edge

TSMC's partnerships with and are critical to its AI dominance. The company is manufacturing NVIDIA's Blackwell GB200 AI chip using its 4nm process and will produce the Rubin platform on 3nm nodes. These chips are expected to power data centers for the next generation of AI models, with NVIDIA projected to generate $500 billion in U.S. AI infrastructure over four years.

Apple's exclusive reliance on TSMC for its M-series chips (used in MacBooks and iPhones) further cements TSMC's market share. As Apple integrates AI into its ecosystem, demand for TSMC's advanced nodes will only grow.

R&D and Geopolitical Resilience

TSMC's $38–$42 billion annual R&D budget ensures it stays ahead of rivals like Samsung and Intel. Its 2nm node, set for mass production in late 2025, will enable more energy-efficient AI chips, while CoWoS (chip-on-wafer-on-substrate) technology is critical for multi-die AI accelerators. By 2025, TSMC's CoWoS capacity is expected to hit 70,000 wafers per month, with further expansion planned.

Geopolitically, TSMC is diversifying its footprint to mitigate risks. Its $165 billion U.S. investment under the CHIPS Act—spanning Arizona and Texas—will produce 2nm and 3nm chips by 2028, aligning with U.S. efforts to secure domestic AI supply chains. This move not only insulates TSMC from geopolitical tensions but also positions it to capture a larger share of the U.S. market.

The Case for Long-Term Investment

While short-term volatility is inevitable, TSMC's fundamentals and strategic positioning make it a fortress stock in the AI era. Key metrics to watch:
- Gross profit margin: Remained at 43.1% in Q4 2024, reflecting pricing power and operational efficiency.
- Market share: AI/HPC chips now contribute 60% of revenue, with 3nm/5nm nodes dominating 74% of wafer revenue.
- Valuation: Despite a 46.5% YoY revenue surge, TSMC trades at a forward P/E of ~22, significantly lower than peers like NVIDIA (~45).

Investors should also consider TSMC's ability to navigate geopolitical risks. Its global expansion and pricing leverage—such as revoking a 40% discount on 4nm chips for Intel—demonstrate its market dominance.

Final Verdict: A Cornerstone of the AI Era

TSMC's combination of technological leadership, strategic partnerships, and geopolitical agility makes it a must-own for investors betting on the AI revolution. While billionaire moves like Tepper's profit-taking highlight the need for patience, the broader trend of increased stakes by figures like Druckenmiller and Fisher signals enduring confidence.

For those seeking exposure to the AI infrastructure boom without the volatility of pure-play AI stocks, TSMC offers a balanced, high-conviction opportunity. As the world races to build the next generation of AI models, TSMC will remain the invisible hand shaping the future—one chip at a time.