Taiwan Semiconductor Manufacturing Company Limited (TSM): Among The High Growth Companies Hedge Funds Are Buying

We recently published a list of 15 High Growth Companies Hedge Funds Are Buying. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against other high growth stocks.

The global economy in 2025 is expected to face modest growth amid ongoing challenges, with projections for US GDP at 2%, the Eurozone at 0.9%, and China at 4.2%. Inflation is likely to remain high because of increasing fiscal spending and potential tariffs, and central banks may have limited room to cut rates, leading to uncertain markets and possible volatility. However, rising productivity driven by AI and other emerging technologies offers long-term promise. The US is expected to benefit the most from these gains, while Europe may lag behind due to slower investment and tech adoption.

According to Deutsche Bank Wealth Management, policy is shifting from monetary to fiscal, with countries like China expected to launch growth initiatives. Equities, particularly American stocks, are favored by investors, supported by profit growth and favorable policy expectations. Bond markets and commodities also offer opportunities, and infrastructure investment is considered a long-term growth area. Similarly, despite the current market uncertainty, BlackRock believes there is reason to stay optimistic about developed market stocks in the next 6 to 12 months. American Treasuries, which used to act as a safety net when stocks dropped, have not offered the same protection lately. In addition, the dollar lost ground in recent selloffs, which is unusual. As a result, some investors are turning to alternatives like gold, which has hit record highs. The rise of AI is also reshaping the market, creating more concentration in a few big tech names. That can strengthen returns, but it also raises risks. Private capital is in demand too, though higher interest rates may weigh on future returns there.

As markets get more unpredictable, many investors are starting to follow hedge funds, hoping they can repeat last year’s strong returns and stay ahead of the curve. In 2024, hedge funds posted remarkable performance, leveraging the volatility and policy shifts in the markets. The average return through November was 10.7%, which is a significant improvement over the 5.7% return for the same period in 2023. This uptick was supported by market turbulence, changes in central bank policies, and the uncertainty surrounding the American presidential election. Notably, some hedge funds saw spectacular gains, such as Light Street Capital’s long/short tech fund skyrocketing 59.4%, while Discovery Capital, a macro-focused fund, posted a 52% return. Bridgewater's Pure Alpha fund gained 11%, and Marshall Wace, a major British hedge fund, saw impressive returns across several of its funds, including a 14% return in its Eureka fund. Multi-strategy funds like Citadel and Millennium also performed well.

Our Methodology

For this article, we used the Finviz screener and filtered out stocks with 5-year revenue growth of over 20%, verifying this information from additional sources. We picked the 15 stocks with the highest hedge fund sentiment to compile this list, taking data from Insider Monkey's database of Q4 2024. We ranked the list from least to most hedge fund holders.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 186

Average 5-Year Revenue Growth: 20.73%

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is one of the biggest semiconductor companies in the world. On May 1, Morgan Stanley maintained an Overweight rating on TSM but trimmed the price target from TWD2,454 to TWD2,330. Morgan Stanley lowered its price target for TSM but kept a bullish stance, calling it a Top Pick. The firm sees strong upside potential, especially as big tech players like Meta and Microsoft bolster AI spending, which could offset worries about weaker demand for TSM’s advanced chip packaging tech.

On March 12, MediaTek and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) partnered to successfully showcase the first working power management unit and integrated power amplifier built using TSM’s advanced N6RF+ chip process. This breakthrough allows both components to be combined into a single chip, helping shrink the size of wireless connectivity devices while boosting power efficiency. The project reflects a year of close collaboration between the two companies. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) ranks 2nd on our list of the best high growth stocks.

According to Insider Monkey’s fourth quarter database, 186 hedge funds were bullish on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), compared to 158 funds in the last quarter. Ken Fisher’s Fisher Asset Management was the largest stakeholder of the company, with 28.35 million shares worth $5.6 billion.

Overall, TSM ranks 2nd among the high growth companies hedge funds are buying. While we acknowledge the potential of TSM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

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