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Cathie Wood’s Ark, Nordea, E Fund load up TSMC amid earnings hiccup while AI pushes industry valuation towards bubble zone
- Funds managed by Ark Investment, Nordea and E Fund have topped up their holdings in TSMC equity before the stock took a knock last week
- Profit at Taiwanese chip maker shrank last quarter for the first time in four years, and sales in 2023 could drop 10 per cent on weak electronics demand
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Some global fund managers are making big bets on Taiwan Semiconductor Manufacturing Corp (TSMC) on the back of artificial intelligence (AI) theme, just as the world’s biggest contract chip maker is facing its biggest earnings challenge in four years.
Cathie Wood at Ark Investment spent US$14.6 million on 144,738 American depositary shares during the June quarter, raising its stake for the first time since the end of 2021, according to its latest 13F filings. Scandinavian fund Nordea Investment Management boosted its holding by 560 per cent to expand its ADR holding to US$332.4 million.
A local fund managed by Guangdong-based E Fund Management bought 12,408 ADRs worth US$1.2 million over the same period, returning for more of the Taiwanese chipmaker’s shares after a three-year pause.
Those purchases are being tested as the stock slumped on Friday by the most in five months, after TSMC published its first quarterly drop in profit in four years. Global demand for electronics remained weak amid recession worries, with TSMC executives guiding a 10 per cent decline in sales this year while injecting a dose of short-term industry gloom.
“The short-term fancy about the AI demand definitely cannot [be extrapolated] for the long term,” Chairman Mark Liu said during a conference call with analysts on July 20. “Neither can we predict the near future, meaning next year, how the sudden demand will continue or will flatten out.”
The caution is likely to weigh on the outlook for semiconductor demand and damp the AI hype, two of the most crowded bets among investors this year. Technology is the top sector pick for 51 per cent of Asian fund managers overseeing US$257 billion assets, according to a July survey by Bank of America, versus up 31 per cent in June.
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