We recently published a list of 17 trending AI stocks according to the latest news and analyst ratings. In this article, we take a look at how Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) compares to other trending AI stocks.
One of the biggest breakthroughs in artificial intelligence in recent years has been advances in natural language processing. These AI models in language are now making their way into the business world and society as a whole. Sound estimates from Goldman Sachs investment advisors suggest that these AI tools could lead to a 7% increase in global GDP, worth nearly $7 trillion, over the next decade and increase overall productivity growth by 1.5 percentage points. Economists Joseph Briggs and Devesh Kodnani wrote in a recent report that the ability of AI tools to generate content indistinguishable from human-created products and to break down communication barriers between humans and machines represents a major advance with potentially large macroeconomic impact.
Some of these macro factors are easier to see in numbers. A recent study on artificial intelligence by Stanford University in the US shows that companies are already overtaking science in training AI models. For example, the AI industry was able to train almost 51 notable machine learning models in 2023 (read more about these companies at Top 33 AI companies to watch out for), compared to just 15 in academia. This is despite the fact that the costs associated with training the models have increased. For example, training ChatGPT 4, the latest version of the popular ChatGPT that sparked the AI wave in late 2022, cost nearly $80 million. Computing Gemini Ultra, an AI tool developed by Google, also cost $191 million. The number of AI patents is also increasing, as evidenced by the fact that the number of AI patents granted has increased more than 31 times since 2010.
This exciting phase in the world of technology has ushered in a new boom for the global economy, which was previously plagued by inflation concerns, geopolitical conflicts and stagnant demand numbers. The bullish sentiment around AI needs to be balanced with caution. In the long term, investors should prepare for significant changes in the way the world works, as AI could automate nearly 300 million jobs. Previous automation cycles have created new jobs and opportunities to replace them. Identifying these opportunities (read more about them by clicking on 20 industrial stocks that are already riding the AI wave) could go a long way toward balancing the risk profiles of high-growth portfolios. Recent research suggests that 60% of people employed today are in jobs that didn’t exist half a century ago, supporting the claim that over 80% of job growth since then can be explained by technology-driven innovation.
Our methodology
For this article, we selected AI stocks based on the latest news and analyst ratings. These stocks are also popular with hedge funds. Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (read more details here).
A close-up of a complex network of integrated circuits used in logic semiconductors.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of hedge fund owners: 135
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures and sells integrated circuits and semiconductors. These chips are used by some of the world’s largest technology companies, including Apple, NVIDIA, and Advanced Micro Devices. The Taiwan-based company has benefited from the AI boom as demand for the products it markets is soaring. One indicator of this is the company’s recent revenue figures. In the month of July, the company generated around NT$257 billion, up more than 44% compared to July 2023. Revenue for the first seven months of the year was NT$1.5 trillion, up over 30% compared to the same period in 2023.
Financial experts like Susquehanna analyst Mehdi Hosseini are optimistic about Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) long-term growth prospects. The analyst recently maintained a positive rating on the stock and set a price target of $250. Recent reports suggest that the company will raise prices on key 3nm and 5nm nodes in 2025. This increase should help the company beat analysts’ expectations for earnings per share in 2025, which currently stands at about $6.3, up nearly 21% year over year.
Total TSM ranks 10th on our list of trending AI stocks according to the latest news and analyst ratings. While we recognize TSM’s potential as an investment, we believe some AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than TSM but trades at less than 5x its earnings, read our report on the cheapest AI stock.
READ MORE: Michael Burry sells these stocks and Jim Cramer recommends these stocks.
Disclosure: None. This article was originally published on Insider Monkey.
