Revisiting optimism for chips? Cathie Wood significantly increased her holdings in Taiwan Semiconductor, reaching the largest scale in nearly a year

Attitude reversal! "Cathie Wood" makes a large-scale purchase of Taiwan Semiconductor.

On May 20, it was reported that "Cathie Wood" made her first large-scale purchase of Taiwan Semiconductor in nearly a year. This is the most significant signal since the third quarter of last year, indicating a shift from major selling of Taiwan Semiconductor to significant buying.

Data shows that Cathie Wood's flagship fund, Ark Innovation ETF, purchased 123,587 American Depositary Receipts (ADRs) of Taiwan Semiconductor on Monday (May 19), while Ark Next Generation Internet ETF bought 74,189 ADRs.

The report pointed out that although Ark's funds also purchased Taiwan Semiconductor in February this year, this purchase scale is the largest since June 18 of last year, equivalent to 87% of the Taiwan Semiconductor shares held by Ark Asset Management as of the end of March.

Tariff easing and positive industry outlook

From the news perspective, Cathie Wood's increase in holdings comes at a time when the reduction in tariffs between China and the U.S. far exceeds expectations, greatly improving market sentiment. Additionally, a series of artificial intelligence agreements signed by Trump with three Middle Eastern countries also benefits Taiwan Semiconductor's business outlook, as it is an important supplier for Nvidia.

From the market trend perspective, Cathie Wood's shift seems to have been validated by the market. From the peak in January to the low in April, Taiwan Semiconductor fell by as much as 37%, but has since recovered more than half of that decline. Analysts predict that there is about an 11% upside potential for Taiwan Semiconductor's stock price in the next 12 months.

Taiwan Semiconductor's earnings report released on May 9 showed that sales in April reached NT$349.57 billion, a month-on-month increase of 22.2% and a year-on-year growth of 48.1%, far exceeding analysts' expectations of 38%, and accelerating from last month's year-on-year growth rate of 46.5%.

Wall Street Insights previously mentioned that the capital expenditures of Meta and Microsoft indicate that demand for AI products remains strong, confirming the bright prospects for the company, with Morgan Stanley rating Taiwan Semiconductor stock as overweight.

It is noted that although Cathie Wood is widely known for her aggressive bets on disruptive technologies, her flagship fund has performed poorly in recent years.

Despite an 82% increase over the two years ending in 2024, the ARK Innovation ETF is still down about 63% from its peak and has underperformed the Nasdaq Composite Index for most of the past five years Analysis suggests that this large-scale purchase of Taiwan Semiconductor by "Wooden Sister" may be a strategic move to revitalize fund performance by betting on core companies in the AI supply chain under the current market conditions.

Before "Wooden Sister" was reported to have made significant purchases of Taiwan Semiconductor, the recently released 13F report showed that Wall Street giants also bought Taiwan Semiconductor in the first quarter. Among them:

Wall Street legendary investor Stanley Druckenmiller, known as "the greatest money-making machine in history," significantly increased his holdings in Taiwan Semiconductor in the first quarter, adding 491,300 shares, bringing his total holdings to 598,800 shares, an increase of 456.93%.

HH&H International Investment, managed by Duan Yongping, established a new position in Taiwan Semiconductor in the first quarter, purchasing 271,800 shares, with a holding value of $45.117 million, accounting for 0.38%