Harvard University’s Favorite AI Stock Pick: Taiwan Semiconductor (TSM)

Harvard’s Stake: $232,102,708

Taiwan Semiconductor (NYSE:TSM) is the biggest holding of Harvard Management, arsenic of the extremity of the archetypal quarter.

TSMC is 1 of the biggest beneficiaries of the AI revolution. It manufactures the world’s astir precocious semiconductors. Every large AI spot and high-performance processor is made successful TSMC’s fabs. 74% of Taiwan Semiconductor’s (NYSE:TSM) wafer gross comes from precocious nodes (7nm and below). No rival tin lucifer TSMC astatine this scale.

This gives it a almighty and durable moat. New process technologies similar A13 and N2U are already successful development. TSMC is expected to enactment up of rivals for years to come. Margins are expanding dramatically. Gross borderline roseate 7.4 percent points year-over-year. Operating borderline deed 58.1% successful the latest quarter. Taiwan Semiconductor (NYSE:TSM) has important pricing power. Costs are being managed precise efficiently. Revenue maturation is arsenic impressive. Q1 gross jumped 40.6% year-over-year. For the afloat year, the institution expects maturation of implicit 30%. AI request shows nary signs of slowing down. Despite each this, the banal trades astatine a guardant P/E of conscionable 26. That is lone a flimsy premium to the broader tech sector. The valuation is inactive beneath levels seen successful precocious 2025. For the world’s astir captious spot maker, that terms looks precise reasonable.

Green Alpha Investment stated the pursuing regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) successful its Q1 2026 capitalist letter:

“Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has commenced wide accumulation of 2nm chips utilizing nanosheet Gate-All-Around transistors—the astir important architectural leap successful a decade—with archetypal yields already reaching 70-80%, good up of immoderate competitor. The N2 node delivers a 15% show boost astatine the aforesaid powerfulness oregon a 25-30% simplification successful powerfulness depletion versus 3nm, and TSMC expects to scope (Click Here to Read the Letter successful Detail).”

Close-up of Silicon Die are being Extracted from Semiconductor Wafer and Attached to Substrate by Pick and Place Machine. Computer Chip Manufacturing astatine Fab. Semiconductor Packaging Process.

While we admit the imaginable of TSM arsenic an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you're looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.