We recently published a list of the 30 Stocks That Should Double in 3 Years. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against other stocks that should double in 3 years.

On April 25, Kari Firestone, Aureus Asset Management executive chairman and co-founder, joined CNBC’s ‘Squawk Box’ to discuss the latest market trends and express how this is a reasonable place for long-term investors to enter the market. Despite persistent concerns about a recession coming from tariffs, Firestone thinks that corporate earnings have generally exceeded expectations. The strong performance of major tech companies has been a key driver behind the market’s recent gains, such as those in the MAG7. Elaborating on the significance of these tech giants, Firestone also underscored that the top 2 companies in the S&P 500, regardless of which they are, match the market value of the bottom 300 companies in the index. This concentration means that these leading firms are fundamental to the US economy’s progress.

The conversation then addressed the impact of proposed FDA budget cuts on innovation for biotech companies. Firestone agreed that such cuts could slow down the approval process for new products and drug manufacturing, and she advised against reducing the FDA’s budget. However, she believes that the market has already priced in these risks. She compared the situation to previous market overreactions, such as the 32% drop during the early COVID-19 period, which was followed by a rapid recovery.

Firestone also concluded that the market is now fairly valued. Some sectors offer attractive opportunities due to recent price declines. She assessed the overall market valuation in light of tariff uncertainties and the recent rebound from a 20% drop to a current decline of about 10.5%. She explained that the market’s price-to-earnings multiple has decreased from 22.5x next year’s earnings to 18.5x, assuming no severe recession. She’s confident that the market is unlikely to end the year lower than current levels and recommends that long-term investors enter the market at this stage. Firestone believes that the market has partially priced in the impact of tariffs. She estimated that a 5% to 10% tariff is reflected in current prices. While a full-blown recession may not be entirely priced in, a slowdown likely is.

Our Methodology

We sifted through financial media reports and Reddit threads to compile a list of the top 30 stocks that should double in 3 years. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.

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).

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

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 186

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures, packages, tests, and sells integrated circuits and other semiconductor devices. It provides various wafer fabrication processes, such as processes to manufacture complementary metal-oxide-semiconductor logic, mixed-signal, radio frequency, embedded memory, and others.

On April 21, TSMC announced that its role in the semiconductor supply chain limits its ability to ensure export compliance. The announcement came months after its AI silicon was found with US-sanctioned Huawei Technologies Co. through intermediaries. On the same day, Barclays analyst Simon Coles lowered the price target on the stock to $215 from $255 while keeping an Overweight rating. According to the analysts, TSMC shares are already pricing in a slowdown.

In FQ1 2025, HPC made 59% of TSMC’s total revenue, which totaled $25.78 billion and improved by 41.40% year-over-year. This HPC revenue itself improved by 7% sequentially due to the sustained demand for AI-related applications, which the CEO of the company anticipates to double in revenue in 2025. To support this explosive growth in AI and HPC, TSMC is making substantial investments in advanced packaging technologies, particularly CoWoS. Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) is working to double its CoWoS capacity in 2025.

The company’s results and guidance showcased strong AI chip demand, which is why Sands Capital Technology Innovators Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q4 2024 investor letter:

“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.

Meanwhile, TSMC’s competitive position within the leading-edge chip fabrication industry has improved. The company noted that demand for its next-generation 2nm (N2) node is considerably higher than for its predecessor, N3. Additionally, TSMC has more capacity for N2 than N3. This situation contrasts with Intel and Samsung, which both recently disclosed struggles in ramping up their leading-edge nodes. Together, Intel and Samsung account for approximately $25 billion of foundry revenue, which could potentially migrate to TSMC over time…” (Click here to read the full text)

Overall, TSM ranks 4th on our list of the stocks that should double in 3 years. While we acknowledge the growth potential of TSM, our conviction lies in the belief that AI stocks hold great promise for delivering high 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 an 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.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

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