Billionaire Chase Coleman Just Bought a Stock Whose Artificial Intelligence (AI) Revenue Is Projected to Triple This Year
As an investor, monitoring the investment habits of billionaire hedge fund managers can serve two purposes. First, it can spark new investment ideas by drawing attention to companies you may not have considered. Second, it can help validate investment decisions that have already been made.
Chase Coleman and his team at Tiger Global Management recently raised a hedge fund’s stake in a popular way to invest in the artificial intelligence (AI) arms race: Taiwan Semiconductor Manufacturing Co., Ltd (NYSE: TSM)commonly referred to as TSMC.
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In the third quarter, Tiger Global Management increased its stake in the business by approximately 20% and now owns 3.63 million shares (2.8% of its total portfolio) worth $671 million. The fact that hedge funds are continuing to buy suggests there is still time for others to buy what is considered an expensive stock by some financial measures.
It’s Q4 now, so the question is whether there’s still time to buy TSMC. Let’s take a closer look and see if the answer shows itself.
TSMC is the world’s largest semiconductor chip manufacturer, and serves as a manufacturer for many of the world’s largest technology companies and chip designers. Almost every high-tech company uses chips manufactured by TSMC, including… Apple, Qualcomm, Advanced Micro Devices, and Nvidia. These companies do not maintain the facilities needed to mass-produce the chips they design, so they outsource this highly complex work (some manufacturing processes require several hundred precise steps to complete) to TSMC.
This puts TSMC in a great position, as even competitors like Intel They come to it to manufacture the chips that go into their products.
As TSMC constantly pushes the boundaries of chip technology and introduces new manufacturing innovations time after time, it has asserted itself as a top choice in this field. This can be seen in the growth of AI-related production efforts. It appeared that TSMC’s management could see the potential presented by AI all the way back in the second quarter of 2023 when TSMC’s management projected that AI-related revenues would grow at a 50% compound annual growth rate (CAGR) over the next five years and eventually represent a rate Low growth – teens percentage of total revenue. Management’s expectations may have underestimated the impact of AI on its revenues. In its recent third-quarter conference call, management noted that AI-related revenue is expected to triple for the year and should make up a moderate percentage of revenue in 2024.
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