Taiwan Semiconductor Manufacturing Company Limited (TSM) Rallied on Increasing Demand For AI Chips

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Soumya Eswaran

Wed, May 13, 2026 astatine 8:26 AM CDT 3 min read

Baron Capital, an concern absorption company, released its Q1 2026 capitalist missive for the “Baron Durable Advantage Fund”. A transcript of the missive tin beryllium downloaded here. In Q1 2026, Baron Durable Advantage Fund (the Fund) declined 9.0% (Institutional Shares) compared to the 4.3% diminution for the S&P 500 Index (the Index), the Fund’s benchmark. The Fund started 2026 with optimism, having posted 3 consecutive years of beardown marketplace returns. However, heightened geopolitical tensions and the consequent warfare with Iran drove up lipid prices, adversely affecting marketplace dynamics. Two-thirds of the Fund’s comparative underperformance was owed to assemblage allocation, with the remaining 3rd attributable to mediocre banal selection. The missive highlighted durable structural competitory moats. As a long-only investor, the Fund aims to execute an annualized alpha of 100 to 200 ground points, nett of fees, portion minimizing imperishable superior loss. In addition, delight cheque the Fund’s apical 5 holdings to cognize its champion picks successful 2026.

In its first-quarter 2026 capitalist letter, Baron Durable Advantage Fund highlighted Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) arsenic a starring show contributor. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s starring shaper of integrated circuits and different semiconductor devices. On May 12, 2026, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) closed astatine $397.28 per share. One-month instrumentality of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was 5.91%, and its shares gained 103.98% implicit the past 52 weeks. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has a marketplace capitalization of $2.06 trillion.

Baron Durable Advantage Fund stated the pursuing regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) successful its Q1 2026 capitalist letter:

"Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) shares roseate 11.5% during the archetypal quarter, arsenic gross maturation of 20.5% (25.5% successful USD) exceeded expectations owed to surging request for AI chips. TSMC dominates the precocious semiconductor foundry market, controlling implicit 90% stock of cutting-edge sub-7 nm nodes that powerfulness AI servers, flagship smartphones, and autonomous vehicles. The institution benefits from a virtuous rhythm successful which its monolithic standard and profitability make the superior indispensable to money manufacture starring R&D and capex, successful crook widening its technological moat and reinforcing its pricing power. As the eventual picks-and shovels supplier of the AI era, TSMC remains insulated from the competitory dynamics of the AI spot plan ecosystem. Whether hyperscalers make customized accelerators oregon deploy merchant GPUs from companies similar NVIDIA and AMD, astir each precocious AI accelerators are manufactured exclusively astatine TSMC’s 3nm and 5nm nodes. We judge TSMC volition present 20% net maturation implicit the adjacent respective years, supported by secular AI-driven request for leading-edge manufacturing capacity."

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