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Global Chip Giant Poised for "Outsized" Growth Opportunity from A.I., Says Fund Manager

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TSMC Positioned to Benefit from Artificial Intelligence Trend, Says Fund Manager

Taiwan Semiconductor Manufacturing Company (TSMC) Offers Outsized Growth Opportunity

Richard Clode, fund manager at Janus Henderson Investors, believes that Taiwan Semiconductor Manufacturing Company (TSMC) is poised to benefit from the growing trend of artificial intelligence (AI). According to Clode, as devices like iPhones, laptops, PCs, and cars incorporate more AI capability, the demand for powerful semiconductors will increase. TSMC's superior 3-nanometer chip technology positions them at the forefront of this trend, as it enables the development of more powerful semiconductors. This is a shift from the past, where companies avoided investing in bleeding-edge technology due to high costs. Clode sees this as an opportunity for TSMC to experience significant growth in the long term.

TSMC's Advantage in AI Market

Clode highlights the fact that as AI becomes an essential feature in various devices, the size of the chips used to enable AI capabilities will need to increase. This creates a favorable scenario for TSMC, as their advanced chip technology allows for the development of larger and more powerful chips. This gives TSMC an advantage in meeting the increasing compute performance needs of AI copilots. With the widespread adoption of AI expected in the coming years, TSMC is well-positioned to meet the growing demand for AI-enabled chips.

Performance of Clode's Funds

Clode manages the Horizon Global Technology Leaders Fund and the Horizon Sustainable Future Technologies Fund. Both of these funds have outperformed the S&P 500's half-year return, with the Horizon Global Technology Leaders Fund up around 34% and the Horizon Sustainable Future Technologies Fund 25% higher. Clode's funds hold top positions in chipmakers Nvidia and TSMC, as well as payments giants Mastercard and Visa, and several Big Tech stocks.

TSMC's Potential Upside

While TSMC recently reported a decline in second-quarter profit due to sluggish demand for consumer electronics, analysts see potential upside for the company. FactSet data shows that 92% of analysts covering the stock have given it a buy rating, with a potential upside of nearly 15%. TSMC's strategic position in AI-related stocks, such as Nvidia, further enhances its potential for growth and success in the future.

New Business Opportunities in the AI Semiconductor Market

As Richard Clode, a fund manager at Janus Henderson Investors, highlights the growth potential of Taiwan Semiconductor Manufacturing Company (TSMC) in the artificial intelligence (AI) industry, new business opportunities arise. The increasing demand for powerful semiconductors in devices with AI capabilities presents a unique chance for entrepreneurs to tap into this growing market. By leveraging TSMC's advanced chip technology, new businesses can focus on developing innovative solutions that cater to the expanding AI market. With AI becoming a crucial feature in smartphones, laptops, PCs, and even cars, there is a pressing need for larger and more powerful chips. TSMC's 3-nanometer chip technology positions them at the forefront of this trend, ensuring compatibility with the evolving AI landscape. To capitalize on this opportunity, entrepreneurs can consider offering specialized chip designs, AI co-processor solutions, or AI-focused hardware acceleration. By aligning their products with TSMC's capabilities and the increasing compute performance needs of AI copilots, new ventures can cater to the growing demand for AI-enabled chips. Furthermore, aligning with TSMC's strategic position in the AI market can increase the likelihood of success for new businesses. TSMC's close relationship with industry players like Nvidia, a leader in AI-related stocks, opens avenues for collaborations and partnerships that can enhance product offerings and market positioning. While the AI semiconductor market is highly competitive, the positive ratings from analysts for TSMC and its potential upside demonstrate a promising trajectory. Entrepreneurs entering this space should focus on differentiation, innovation, and strategic partnerships to stand out in the market and capitalize on the significant growth opportunities presented by the AI trend. In conclusion, the rise of artificial intelligence signifies a vast growth opportunity for new businesses in the semiconductor industry. By leveraging TSMC's technological superiority and strategic position, entrepreneurs can develop cutting-edge solutions that cater to the increasing demand for AI-enabled chips. With the AI market expected to witness widespread adoption in the coming years, now is a favorable time for innovative ventures to make their mark in this exciting industry. Article First Published at: https://www.cnbc.com/2023/07/21/global-chipmaker-set-for-an-outsized-growth-opportunity-fund-manager.html

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