Strong Demand Lifted Taiwan Semiconductor Manufacturing Company Limited (TSM) in Q3

Harbor Capital Appreciation Fund, an investment management company, released its Q3 2025 investor letter. A copy of the same can be downloaded here. The Harbor Capital Appreciation Fund primarily focuses on investing in equity securities, targeting U.S. companies that have a market capitalization of at least $1 billion at the time of investment. US equities delivered solid results in the third quarter, driven by continued momentum in AI and strong corporate earnings. The Federal Reserve’s interest rate cut also supported the market at the end of the quarter. The fund returned 5.11% in the quarter compared to 10.51% for the Russell 1000® Growth Index and 8.12% for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Harbor Capital Appreciation Fund highlighted stocks such as Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM). Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures, packages, tests, and sells integrated circuits and other semiconductor devices. The one-month return for Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was 3.05%, and its shares gained 44.82% over the last 52 weeks. On December 24, 2025, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stock closed at $298.80 per share, with a market capitalization of $1.55 trillion.

Harbor Capital Appreciation Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its third quarter 2025 investor letter:

"Shares of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) were driven higher by strong demand for advanced AI and high-performance computing chips, with the company’s leadership in next generation manufacturing cementing its role in the industry’s growth."

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is in 9th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 194 hedge fund portfolios held Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of the third quarter, compared to 187 in the previous quarter. In the third quarter of 2025, Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) revenue increased 6% sequentially in NT. While we acknowledge the potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and shared stock picks by Ken Fisher from growth stock portfolio. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.