We recently released a list Buy 15 Best Growth Stocks in the Next 3 Years. In this article, we will look at the position where Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) represents the purchase of other growth stocks over the next 3 years.
On April 29, Dan Ives of Wedbush Securities joined the "Electric Lunch" on CNBC to discuss his views on the technology sector and said tariffs did not stop the AI revolution. Ives believes that the key issue for the industry is whether spending, especially whether capital expenditure is being maintained. He expressed his confidence in capital expenditures relentlessly and predicted that the upcoming results of large tech companies will be more of a market trust than arousing existing fears. Since some investors think that concerns about potential soft patches in the economy remain, people prefer safer investments in insurance and other stable sectors over large technologies. But Ives acknowledged that despite the uncertainty in recent weeks, his own investigation and field research have shown that spending related to AI has remained stable. He noted that while spending has accelerated in some parts of the cloud space, overall uncertainty could lead to extensive guidance from companies.
Roth Managing Director, Chief Economist and Macro Combatist Michael Darda also believes that AI will produce reliable returns in the future. Ives agrees with Darda's assessment and says businesses are seeing similar advances that cannot withstand the abandonment of AI projects without falling behind. He also pointed out that the AI revolution is a core theme for companies like those in MAG7, which is why the challenges posed by tariffs do not affect the AI revolution. Darda has turned his outlook from bearish to bullish due to his personal experience with AI tools, and has been bullish on Tech and AI recently, which he believes has improved over the past year.
Dan Ives reiterated that despite the uncertainty created by tariffs, the demand for software remains a security blanket, and spending on hyperscale companies is expected to continue.
Our methodology
We screened financial media reports to compile a list of top growth stocks purchased over the next 3 years. We then selected 15 stocks with a CAGR of over 20% in 3 years of revenue. As of 4Q4, these stocks were ranked in the rising order of the number of hedge funds, which comes from Insider Monkey's database.
Why are we interested in stocks that hedge funds to accumulate? The reason is simple: Our research shows that we can beat the market by mimicking the top stocks of the best hedge funds. Our strategy for quarterly newsletters selects 14 small and large stocks every quarter, returning 373.4% since May 2014, beating its benchmark by 218 percentage points (sEE is here for more details).
Close-up of complex integrated circuit networks used in logic semiconductors.
3-year income CAGR: 22.32%
Number of hedge fund holders: 186
Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) manufactures, packages, tests and sells ICS and other semiconductor equipment. It provides a series of wafer manufacturing processes such as production of complementary metal-oxide-oxidation logic, mixed signals, radio frequency, embedded memory, etc.
In FQ1 in 2025, HPC accounts for 59% of TSMC's total revenue, with total revenue of US$25.78 billion, a year-on-year increase of 41.40%. The HPC revenue itself has increased 7% in turn, driven by the demand for AI-related applications. To support this growth in AI and HPC, TSMC is investing in advanced packaging technologies, especially Cowos. TSMC expects that its Cowos will reach twice the capacity by 2025. It is worth noting that 3NM cargo accounts for 22% of total wafer revenue, while 5nm transport accounts for 36%.
On April 21, Barclays analyst Simon Coles lowered TSMC's price target from $255 to $215 while maintaining an overweight rating. According to analysts, the company's stock is already slowing down its pricing. From 2024 to 2029, Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) expects revenue CAGR to be close to 20%.
The company's performance and guidance demonstrated strong demand for AI chips, which is why the Sands Capital Technology Innovators Fund pointed out the following about Taiwan Semiconductors Manufacturing Corporation Co., Ltd. (NYSE:TSM) in its Q4 2024. Investor's letter:
"Taiwan Semiconductor Manufacturing Company Co., Ltd. (NYSE:TSM) Results and guidance for the third quarter of 2024 show the ongoing demand for artificial intelligence (AI) chips. Revenue rose 29%, and revenue rose 54% year-on-year. Gross profit margins have been the highest since 2022 and are backed by price increases, and record utilization has been used on 3nm (NM) and 5nm nodes. TSMC's full-year revenue outlook rose from 25% to 30% growth. The company also expects higher capital expenditure in 2025, a major indicator of revenue.
Overall, TSM Ranked second On our list of the best growth stocks to buy in the next three years. Although we acknowledge the growth potential of TSM, our belief is that AI stocks provide high returns in a shorter time frame and do this in a shorter time frame. AI stocks have risen since the beginning of 2025, while popular AI stocks have lost about 25%. If you are looking for more promising AI stocks than TSM, but whose earnings are trading at less than 5 times the price, check out our report Cheapest AI stocks.
Read the next article: Buy 20 Best AI Stocks Now and According to the billionaire, there are now 30 best stocks.
Disclosure: None. This article was originally published in Internal monkey.