Could Taiwan Semiconductor Manufacturing Co. (TSM) Be the Biggest Long-Term Winner From the AI Chip Boom?

Could Taiwan Semiconductor Manufacturing Co. (TSM) Be the Biggest Long-Term Winner From the AI Chip Boom?

Mon, August 24, 2026 at 4:48 PM GMT+3 3 min read

• TSM -2.74%
• TSM -2.74%

Sustainable Growth Advisers (SGA), an investment management company, released its second-quarter 2026 investor letter for its "Global Growth Strategy." The letter can be downloaded here. The SGA Global Growth Portfolio returned 7.4% gross and 7.2% net, compared with 14.9% for the MSCI ACWI and 19.8% for the MSCI ACWI Growth Index. Momentum leadership and enthusiasm around AI infrastructure drove markets, with semiconductor, memory, and hardware stocks accounting for much of the gain. Although the portfolio owned AI beneficiaries, broader holdings lagged despite fundamentals, as median revenue and EPS growth reached 12% and 14% and more than 60% of the holdings beat expectations. SGA believes valuation compression reflects sentiment rather than weaker business quality, leaving the portfolio near its widest discount to the market since inception. The firm continues to favor durable compounders and expects 16% revenue growth and 20% earnings growth over three years. Also, please check the Fund's top five holdings to see its best picks for 2026.

In its second-quarter 2026 investor letter, SGA Global Growth Strategy highlighted Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as a top contributor to the performance. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world's leading contract chip manufacturer, producing advanced semiconductors for major global technology companies. On August 21, 2026, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) closed at $418.95 per share. The one-month return of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was 2.34%, and its shares gained 73.37% over the past 52 weeks. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has a market capitalization of $1.9 trillion with a 52-week trading range between $223.70 - $479.00.

SGA Global Growth Strategy stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2026 investor letter:

"Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), the world's leading semiconductor foundry, was a top contributor to performance during the quarter. Shares were supported by sustained strength in demand for advanced logic and compute, with customers across AI accelerators and CPUs continuing to require additional capacity. TSMC remains firmly positioned at the leading edge of semiconductor manufacturing, benefiting from secular demand across high performance computing, smartphones, automotive, and AI applications. Its technology leadership and scale support sustained double digit growth, with revenue increasingly driven by recurring and repeatable categories that reduce cyclicality. Given TSMC's dominant competitive position, deep customer entrenchment, and the continued global need for advanced compute, TSMC remains well-positioned to deliver strong double-digit revenue and earnings growth over the coming years. We maintained an above average weight position during the quarter."

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is in 6th position on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 234 hedge fund portfolios held Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of the first quarter which was 224 in the previous quarter. 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 Eagle Capital Management's views on the company. In addition, please check out our hedge fund investor letters Q2 2026 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.