On May 20, ARK Invest, a subsidiary of Cathie Wood, a well-known Wall Street investor and "wooden sister", added its largest position in TSMC in nearly a year.

Data shows that its flagship funds ARK Innovation ETF and Ark Next Generation Internet ETF bought 123,587 and 74,189 TSMC American Depositary Receipts (ADRs) respectively on May 19, which is equivalent to 87% of ARK's positions as of the end of March, setting a record for the highest single-day increase since June 2024.

The background of Sister Mutou's additional position this time is very subtle.Back in early 2024, she continued to reduce her holdings in the semiconductor sector due to concerns about the cyclical risks and valuation bubbles of hardware manufacturers such as Nvidia, and even sold TSMC ADR, turning to bet on software service providers such as UiPath and Twilio.

However, with the explosive growth of AI hardware demand, TSMC, as the global leader in wafer foundry, relies on its monopoly position in advanced processes (such as 3nm, 5nm) and packaging technologies (CoWoS, SoIC), its performance and share price continue to exceed expectations.In the fourth quarter of 2024, TSMC's net profit increased by 57% year-on-year, and gross profit margin climbed to 59%, far exceeding market expectations; revenue guidance for the first quarter of 2025 was further raised to US$25 billion to US$25.8 billion, and capital expenditure plans were expanded to US$38 billion to US$42 billion, indicating that demand for AI chips is still strong-this series of data forced Sister Mu to reassess her investment logic and shift from "avoiding the hardware cycle" to "embracing core barriers in the supply chain."

From a fundamental perspective, TSMC's strong performance is rooted in its irreplaceable role in the AI industry chain.As the core foundry of NVIDIA A100/H100, AMD MI300 series GPUs, as well as Broadcom and Google customized AI ASIC chips, TSMC almost monopolizes the world's advanced process production capacity below 5nm.

Morgan Stanley pointed out that by the end of 2025, more than 90% of the world's AI GPUs will migrate to the 3nm process, and TSMC's CoWoS packaging capacity expansion plan (expected to reach 25,000 wafers per month in 2027) will directly determine the pace of supply of NVIDIA Blackwell architecture chips.

In addition, the capital expenditures of technology giants such as Meta and Microsoft are tilted towards AI infrastructure, further pushing up their dependence on TSMC's advanced processes.According to AMD CEO Su Zifeng's prediction, the data center AI chip market will reach US$400 billion in 2027, with a compound annual growth rate of over 60%, and TSMC is expected to enjoy more than 70% of its OEM share.

Changes in geopolitics and trade policies have also provided a catalyst for Sister Mutou to increase her position.In early 2025, the easing of tariffs between China and the United States and the artificial intelligence cooperation agreements reached between the Trump administration and Saudi Arabia and United Arab Emirates significantly alleviated market concerns about the fragmentation of the semiconductor supply chain.

The construction of TSMC's wafer factory in Arizona, USA, is progressing smoothly and is expected to accept some orders from Apple and Nvidia in 2025. At the same time, its production capacity layout in Japan and Europe further spreads geographical risks.JPMorgan Chase believes that although TSMC's January earthquake resulted in the scrapping of N3/N5 node wafers (affecting approximately US$1 billion in revenue), its pricing power and customer stickiness are enough to offset short-term disturbances, maintain its "overweight" rating and raise its target share price to NT$1388.

Sister Mutou is not an isolated example.In the first quarter of 2025, legendary Wall Street investor Stanley Druckenmiller increased his holdings of TSMC's ADR by 456.93%, and Duan Yongping's fund HH&H International also opened a new position of 271,800 shares.Goldman Sachs, Citigroup and other institutions have raised their target prices one after another. It is expected that TSMC ADR of US stocks is expected to exceed US $250. The core logic lies in AI-driven OEM price rise (3nm order increase or 8%-10%) and advanced packaging service premium (CoWoS price increase of 15%-20%).