Cathie Wood's Ark Bets Big on TSMC: Is This a Turning Point?

2025-05-21 tsmc

New York, Wednesday, 21 May 2025.
Cathie Wood’s ARK Investment Management has made its largest purchase of TSMC ADRs in nearly a year. This signals a significant shift from a selling strategy that has been in place since Q3 of last year. The purchase is equivalent to 87% of the fund’s holdings as of the end of March. The increased investment coincides with easing trade tensions between the US and China. It also mirrors growing AI cooperation between the US and the Middle East, factors benefiting TSMC as a key Nvidia supplier. Is this a sign of renewed confidence in the chipmaker’s future?

Details of the ark investment purchase

Cathie Wood’s Ark Innovation ETF bought 123,587 TSMC American depositary receipts (ADRs) on Monday [3][4]. The Ark Next Generation Internet ETF also increased its position, purchasing 74,189 ADRs [3][4]. This substantial investment highlights a change from a strategy focused on selling TSMC shares since the third quarter of 2024 [3]. The combined purchases by the two funds represent 87% of the firm’s total TSMC holdings at the end of March [1][7].

Factors influencing the investment decision

Several factors appear to have influenced Ark Investment’s increased investment in TSMC. Easing trade tensions between the United States and China have improved market sentiment [1][4]. Agreements between former U.S. President Donald Trump and Saudi Arabia and the United Arab Emirates concerning artificial intelligence (AI) are also a factor [1][4][7]. These agreements are expected to benefit TSMC, a key supplier to Nvidia [1][7]. These developments have bolstered the market outlook for TSMC [1].

TSMC’s recent stock performance and analyst outlook

TSMC’s ADR experienced a notable downturn earlier in the year. The stock fell 37% from its peak in January to its low in April [1][4]. However, it has since recovered more than half of these losses [1][4]. Analysts predict an approximate 11% upside potential for the stock over the next 12 months [1][2][7]. This positive forecast may have contributed to Ark’s decision to increase its stake in the company [1].

Broader context: tsmc’s market position and financial health

TSMC’s April sales report revealed strong revenue growth. The company reported revenue of NT$349.57 billion, a 22.2 % increase month-over-month and a 48.1% increase year-over-year [7]. These figures surpassed analyst expectations, which had projected growth of 38% [7]. Capital expenditure trends from Meta and Microsoft also indicate robust demand for AI products [7]. This demand strengthens TSMC’s prospects [7]. Morgan Stanley has maintained an ‘overweight’ rating on TSMC stock [7].

Strategic implications for ark investment management

Cathie Wood’s ARK Innovation ETF has faced challenges in recent years [7]. Despite an 82% surge over the two years leading up to 2024, the ETF remains approximately 63% below its peak [7]. It has also underperformed compared to the Nasdaq Composite Index over the past five years [7]. Some analysts believe that the increased investment in TSMC is a strategic move. It aims to revitalize Ark’s performance by capitalizing on a key player in the AI supply chain [7].

Other institutional investors increasing tsmc holdings

Ark Investment Management is not alone in increasing its investment in TSMC. Recent filings indicate that other major Wall Street investors also increased their positions in the first quarter [7]. Stanley Druckenmiller increased his TSMC stake by 456.93%, adding 491,300 shares, bringing his total holdings to 598,800 shares [7]. HH&H International Investment, managed by Duan Yongping, initiated a new position in TSMC, purchasing 271,800 shares valued at $45.117 million [7].

Bronnen

tsmc holdings ark invest