Steven Cohen is a billionaire hedge fund investor who is CEO of Point72 Asset Management. While reviewing Point72’s most recent quarterly 13F filing, I came away with a pretty clear conclusion: Cohen is bullish on artificial intelligence (AI). In the quarter ended September, some of Point72’s bigger purchases were in “Magnificent Seven” shares, including Nvidia, AlphabetAnd Microsoft.
Indeed, I see a lot of upside in owning big tech stocks as the AI story continues to unfold. But smart investors like Cohen know there are plenty of other opportunities hidden. Another recent purchase that really stood out to me was Point72’s investment in Taiwanese semiconductor manufacturing (NYSE: TSM). During the third quarter, Cohen’s fund acquired approximately 588,000 shares, increasing its holding by 95%.
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Below, I’ll outline why I see TSMC (as it’s commonly known) as a unique opportunity for AI investors and whether now is a good time to follow Cohen’s lead.
Semiconductor companies such as Nvidia, Advanced micro devicesand many others specialize in designing advanced chipware that powers countless generative AI applications and hardware devices around the world. What many people don’t fully realize, however, is that these companies outsource a large portion of their manufacturing efforts.
This is where TSMC comes into the picture. The foundry process is used extensively by many of the world’s leading semiconductor companies. Don’t you believe me? Consider the fact that it produces equipment for Nvidia, AMD, Amazon Web Services (AWS), Broadcom, Intel, Qualcomm, Sonyand much more. The next decade looks incredibly bright for TSMC.
It’s not enough to say that TSMC’s future is bright because the AI market is huge. Such a position is too vague and is rooted in surface-level assumptions. Instead, I’m going to break down two specific market opportunities that TSMC will dominate over the next decade:
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Global Semiconductor Foundries Market: According to Market.us, the global semiconductor foundry market is expected to grow 8.5% annually between 2024 and 2033, eventually reaching $276 billion by early next decade. Today, TSMC holds an estimated 62% of the global foundry market – with the next closest competitor being Samsungreaching 13% of the market. With such a huge lead and a host of tailwinds that I’ll discuss below, I believe TSMC is well positioned to continue to gain increasing market share as the need for foundry services continues to rise.
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Global GPU Market: My fellow Fool.com contributor Keithen Drury recently made a good point in that use cases for graphics processing units (GPUs) don’t Real case for a company like TSMC. Ultimately, as long as chip designers innovate and come out with the next generation of GPUs, there’s a good chance TSMC will be involved in the manufacturing process. As I outlined in an earlier piece, the global GPU market size is expected to exceed $1.4 trillion by 2034.
