These AI Stocks Soared 270% to 1,400% in 5 Years, but Billionaires Keep Buying

Recent 13F filings reveal billionaire investors, including David Tepper, Chase Coleman, and Daniel Loeb, increased or initiated positions in Taiwan Semiconductor Manufacturing (TSMC) and Nvidia during Q1, driven by strong AI chip demand. TSMC, the leading global chip manufacturer, saw revenue and earnings grow 35% and 60% year-over-year, respectively, and forecasts 40% annualized AI chip sales growth through 2028; Nvidia, benefiting from its GPUs being the gold standard in AI, expects a 53% revenue increase this fiscal year, fueled by its Blackwell platform and automotive chips, despite potential competition from custom AI chip solutions.

Analysis

First quarter 13F filings reveal significant institutional conviction in the artificial intelligence (AI) semiconductor sector, with prominent billionaire investors such as David Tepper, Stephen Mandel, Chase Coleman, and Daniel Loeb notably increasing or initiating stakes in Taiwan Semiconductor Manufacturing (TSM) and Nvidia (NVDA). TSM, which controls over 60% of the global foundry market, demonstrated strong momentum with Q1 revenue and earnings growth of 35% and 60% year-over-year, respectively, driven by robust AI chip demand. The company forecasts AI chip sales to grow at a 40% annualized rate through 2028 and is advancing its technology with the A14 logic process, scheduled for 2028 production, offering a 15% performance increase and 30% power savings over its N2 process. Despite this, TSM acknowledged seasonal softness in smartphone demand, causing a 5% sequential revenue decline, and a minor production disruption from a recent earthquake. TSM trades at 21 times this year's earnings estimate, with analysts expecting 21% annualized earnings growth. Nvidia, whose GPUs are central to the AI chip market, has seen its stock appreciate 1,400% over five years and continues to attract billionaire interest. Its revenue more than doubled to $130 billion in the past year, and analysts project a 53% increase to nearly $200 billion in the current fiscal year, supported by its new Blackwell platform and growth in automotive chip revenue, expected to triple to $5 billion this year. Nvidia faces potential competition from custom AI chip solutions developed by large customers like Amazon and Google, but its NVLink Fusion technology, allowing integration of third-party chips, could expand its addressable market. Nvidia trades at a forward price-to-earnings ratio of 30, against an anticipated 35% annualized earnings growth. The overall positive sentiment (0.85 score) and high market impact score (0.7) for these developments, alongside high per-ticker sentiment for TSM (0.8) and NVDA (0.9), underscore a bullish outlook for these AI-focused chip manufacturers.

Key Decisions for Investors

• Given the strong Q1 performance, positive growth outlooks, and significant endorsements from billionaire investors, positions in TSM and Nvidia warrant consideration for exposure to the AI semiconductor upcycle.
• Investors should monitor TSMC's sustained execution in AI chip manufacturing and capacity expansion, balancing this against inherent semiconductor industry cyclicality, recent segmental softness, and its valuation multiples.
• For Nvidia, the ongoing dominance in AI GPUs and strategic initiatives like NVLink Fusion present compelling growth levers, though vigilance regarding competitive pressures from custom silicon development by major clients and its market valuation remains prudent.