TLDR
- Stanley Druckenmiller sold his Palantir position and has been buying Taiwan Semiconductor (TSM) for four consecutive quarters
- Nvidia CEO Jensen Huang called TSMC a “world-class foundry” and said “you can’t overstate the magic that is TSMC”
- TSMC stock rose 2% after Huang’s comments during Nvidia’s $5 billion Intel investment announcement
- Both Nvidia and Intel confirmed they still rely on TSMC for manufacturing despite Intel’s foundry ambitions
- Wall Street analysts maintain a Strong Buy rating on TSM with an average price target of $280.57
Stanley Druckenmiller, the billionaire investor behind Duquesne Family Office, has made a major portfolio shift in the AI sector. He sold his entire Palantir Technologies position earlier this year while steadily building a stake in Taiwan Semiconductor Manufacturing Company (TSM) over four quarters.
The move comes as TSM gains recognition for its critical role in AI infrastructure. The company manufactures chips for major players including Nvidia and AMD, making it an essential part of the AI supply chain.
Druckenmiller’s exit from Palantir appears tied to valuation concerns. The data analytics company trades at a price-to-sales ratio of 126, well above software peers and beyond levels seen during the dot-com bubble. Despite Palantir’s strong AI platform growth, the stock’s premium pricing may have prompted the strategic exit.
Taiwan Semi Gets High-Profile Endorsement
TSM received a boost this week when Nvidia CEO Jensen Huang praised the company during a major announcement. Huang called TSM a “world-class foundry” and added “you can’t overstate the magic that is TSMC.” The comments came as Nvidia and Intel unveiled plans for a $5 billion partnership.
The praise was particularly telling given the context. Nvidia and Intel announced plans to build custom CPUs for data centers and PCs, combining Intel’s x86 processors with Nvidia’s GPUs through NVLink technology.
Despite Intel’s growing foundry ambitions, both companies confirmed their continued reliance on TSM. Intel CEO Lip-Bu Tan acknowledged that while Intel develops its 14A and 18A process nodes, near-term work with Nvidia depends on TSM’s manufacturing capabilities.
TSM stock rose 2% following Huang’s comments. Investors viewed the endorsement as confirmation of the company’s essential role in AI chip production.
Foundry Leader Maintains Advantage
TSM’s position as the leading contract chip manufacturer gives it unique advantages in the AI boom. The company produces advanced semiconductors for clients who lack their own manufacturing facilities. This includes most major chip designers outside of Intel and Samsung.
The foundry model allows TSM to benefit from multiple AI trends simultaneously. Rising demand for GPUs, CPUs, and specialized AI chips all translate to increased orders for the Taiwan-based manufacturer.
Analysts note that while Intel may capture some foundry market share over time, TSM remains the clear leader in advanced production. The company’s manufacturing expertise and scale make it difficult for competitors to match its capabilities quickly.
Jonathan Weber from Cash Flow Club noted that TSM “remains very well positioned and the clear manufacturing leader for the time being.” This positioning should help the company maintain its role as AI infrastructure expands.
Wall Street analysts maintain a Strong Buy consensus rating on TSM stock based on six Buy ratings, one Hold, and zero Sells over the past three months. The average price target of $280.57 represents 4.4% upside from current levels.
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