One global chipmaker is set to benefit from an “outsized growth opportunity” on the back of the artificial intelligence trend, says Richard Clode, fund manager at Janus Henderson Investors. That’s Taiwan Semiconductor Manufacturing Company (TSMC), according to Clode. “Ultimately, when you look out in three years time, your iPhone is going to have to have a huge amount of AI capability. Every laptop, PC, car is going to have to have AI capability and what’s going to give all of those devices AI capability — [is] having more powerful semiconductors in them,” he told CNBC’s Pro Talks on Wednesday. “Now, how do you make a more powerful semiconductor, you … gotta go more to the leading edge,” Clode said, citing TSMC’s superior 3-nanometer chip technology. He said that reverses the trend of the last couple of decades in which “everyone was kind of fleeing the bleeding edge,” because it was “so expensive.” “So I think what really gives TSMC a much more, I think, an outsized growth opportunity, longer term is this: every chip is just going to have to get bigger to incorporate the compute performance needs to deliver all of these AI copilots that hopefully, we’re all going to be using in the next few years,” he said. Clode manages the Horizon Global Technology Leaders Fund and the Horizon Sustainable Future Technologies Fund. Top holdings in his funds include chipmakers Nvidia and TSMC , payments giants Mastercard and Visa and a range of Big Tech stocks. Both of Clode’s funds have outperformed the S & P 500 ′s half-year return of nearly 16%, although the tech-heavy Nasdaq Composite’s return was comparable at almost 37%. The Horizon Global Technology Leaders Fund was up around 34% in the six months to the end of June, while the Horizon Sustainable Future Technologies Fund was 25% higher. TSMC, the world’s largest chipmaker, is said to be a potential beneficiary of AI-related stocks such as Nvidia. Nvidia relies on TSMC to manufacture its graphics processing units. However, on Thursday, the Taiwanese chipmaker posted a second-quarter profit plunge, in light of sluggish demand for consumer electronics. Analysts covering the stock give it further potential upside of nearly 15%, according to FactSet, with 92% giving the firm a buy rating.
This story originally appeared on CNBC
