Is Taiwan Semiconductor Manufacturing (TSM) the Best WallStreetBets Stock to Buy According to Hedge Funds?

We recently published a list of 12 Best WallStreetBets Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against other best WallStreetBets stocks to buy according to hedge funds.

The World Economic Forum’s Global Retail Investor Outlook 2024 highlighted a sustained transition towards younger retail investors. The research, which spans 13 economies, reflects that 30% of Gen Z start investing in early adulthood, against 9% of Gen X and 6% of Baby Boomers. By the time they enter the workforce, the research demonstrated that 86% of Gen Z have learned about personal investing as compared to 47% of Boomers, highlighting a generational transformation in financial habits.

WEF’s survey mentions that retail investors continue to view cryptocurrency as more understandable and easier as compared to traditional investments such as ETFs, MFs, stocks, and bonds. As per the research, 29% tend to avoid stocks because of a lack of understanding, while only 24% mention the same regarding crypto. Interestingly, among the investors aged under 44 holding cryptocurrencies, over half allocated at least a third of their portfolio to it.

Furthermore, WEF’s research mentioned that financial priorities have been pivoting towards short-term needs. In 2024, 51% of investors focused on emergency savings, reflecting an increase from 41% in 2022, while those who emphasized having sufficient to retire declined from 48% to 42%. As per Dean Frankle, Managing Director and Partner, BCG, individual participation in capital markets can result in long-term financial well-being.

Bloomberg reported that individual investors are becoming relentless when it comes to investing money in the volatile US markets. The firm, while quoting JPMorgan Chase & Co.’s Emma Wu, mentioned that considering the continuous dip-buying strategy throughout the crash, there are estimates that retail traders’ portfolios remain far from breakeven. However, individual investors’ strategy of “buy-the-dip” amidst trade fears has been doing better as compared to the broader market.

Interestingly, retail investors invested US$11 billion in equities since April 2, when Trump’s administration revealed reciprocal levies, reported Bloomberg, while citing data through Wednesday’s close (April 9, 2025). Bloomberg also highlighted that individual investors continue to dip their toes into stocks, while well-established institutional investors are rotating into international markets and less risky assets, including Treasuries.

To list the 12 Best WallStreetBets Stocks To Buy According to Hedge Funds, we sifted through the WallStreetBets forum on Reddit and chose the trending ones. Next, we shortlisted the ones that are popular among hedge funds. Finally, the stocks are ranked in ascending order of their hedge fund sentiments, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Is Taiwan Semiconductor Manufacturing Company Limited (TSM) The Best WallStreetBets Stock To Buy According to Hedge Funds?

A close-up of a complex network of integrated circuits used in logic semiconductors.

Number of Hedge Fund Holders: 186

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is engaged in manufacturing, packaging, testing, and selling integrated circuits and other semiconductor devices. The company’s business in Q1 2025 was impacted by smartphone seasonality. However, this was partially offset by continued growth in AI-related demand. Moving into Q2 2025, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) expects its business to be supported by robust demand for its industry-leading 3nm and 5nm technologies. Notably, in Q1 2025, shipments of 3-nanometer made up for 22% of total wafer revenue, and 5- nanometer accounted for 36%.

From 2024 to 2029, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) expects revenue CAGR to approach 20% in US dollar terms, and long-term gross margin to be 53% and higher. The AI boom continues to fuel innovation in chip design, resulting in new types of processors and accelerators. Furthermore, the company’s collaborative approach with customers and advanced packaging technologies allows it to remain at the forefront of such innovations. This can result in the opening up of new revenue streams and market opportunities.

Sands Capital, an investment management company, published its Q4 2024 investor letter. Here is what the fund said:

“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) third-quarter 2024 results and guidance showcased strong continued demand for artificial intelligence (AI) chips. Revenue increased by 29 percent, and earnings saw a 54 percent rise year-over-year. Gross margins were at their highest since 2022, bolstered by price hikes and record utilization at both the 3 nanometer (nm) and 5nm nodes. TSMC’s full-year revenue outlook was revised upward from 25 percent to 30 percent growth. The company also anticipates higher capital expenditure in 2025, a leading indicator for revenue.

Overall, TSM ranks 3rd on our list of best WallStreetBets stocks to buy according to hedge funds. While we acknowledge the potential of TSM as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

Disclosure: None. This article is originally published at Insider Monkey.

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