Demand Boom Lifted Taiwan Semiconductor Manufacturing Company Limited (TSM) to New Heights

Soumya Eswaran

Fri, February 13, 2026 at 12:26 AM GMT+9 3 min read

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Sustainable Growth Advisers (SGA), an investment management company, released its fourth-quarter investor letter for its “Emerging Markets Growth Strategy.” A copy of the letter can be downloaded here. The fourth quarter of 2025 marked strong divergence from the market. Market leadership by AI beneficiaries and revival of cyclical sectors dominated the market, while quality growth strategies faced challenges. In Q4 2025, the portfolio returned 0.8% (Gross) and 0.6% (Net) compared to the MSCI EM Net TR Index return of 4.7% and the MSCI EM Growth Net TR Index return of 3.3%. In 2025, the portfolio delivered strong returns of 23.8% (Gross) and 22.8% (Net) but lagged the 33.6% and 34.3% returns for the indexes, respectively. The portfolio projects 13% revenue growth and 16% earnings growth annually for the next three years. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, SGA Emerging Markets Growth Strategy highlighted Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as a notable contributor. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s leading manufacturer of integrated circuits and other semiconductor devices. On February 11, 2026, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stock closed at $374.09 per share. One-month return of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was 10.78%, and its shares are up 87.52% over the past twelve months. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has a market capitalization of $1.96 trillion.

SGA Emerging Markets Growth Strategy stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its fourth quarter 2025 investor letter:

"Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was a top contributor during the quarter, driven by robust demand for advanced semiconductor manufacturing and improved gross margins as AI continues to grow strong and the non-AI segment showed signs of recovery. Management raised its revenue growth guidance to the mid-30% range, and given continued strength in demand, AI-related growth targets are expected to move above the current mid-40% level. TSMC’s leadership in cutting-edge process nodes remains undisputed. The company raised its CapEx guidance to support future growth and is expected to increase its AI revenue growth target, reflecting confidence in the secular expansion of high-performance computing and AI workloads. Strategic steps to diversify manufacturing outside Taiwan, including new facilities in Japan, Germany, and the U.S., further strengthen TSMC’s position. With its technology leadership, strong customer relationships, and disciplined execution, TSMC remains well-positioned to deliver strong double-digit revenue and earnings growth over the coming years. We added to the position on weakness during the quarter, maintaining an above-average weight."

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Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is in 9th position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 194 hedge fund portfolios held Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) at the end of the third quarter, up from 187 in the previous quarter. While we acknowledge the potential of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and shared Baron Durable Advantage Fund’s views on the company. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

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

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