Legendary investor Stanley Druckenmiller sold 47,805 shares of Taiwan Semiconductor Manufacturing (TSM +0.46%) in the first quarter of 2026. After the sale, the stake was still worth $167 million at quarter-end, making it the third-largest holding in the Duquesne Family Office portfolio.
Stanley Druckenmiller is worth watching. At Duquesne Capital Management from 1981 to 2010, he delivered roughly 30% annualized returns, with a track record of spotting value early. That matters for investors looking to play the artificial intelligence (AI) boom, since TSMC is the primary chip supplier for Nvidia (NVDA +2.93%) and Advanced Micro Devices (AMD +1.78%).
Duquesne Family Office chairman Stanley Druckenmiller. Image source: Getty Images.
AI demand is fueling TSMC's growth
TSMC just posted another strong quarter, underscoring why Druckenmiller still holds a large position in the stock. Revenue climbed nearly 34% year over year and rose 12% from the first quarter. High-performance computing (HPC) -- which includes demand for AI accelerators -- now accounts for 66% of total revenue.
Management doesn't see a near-term slowdown. Third-quarter revenue is projected at about $45 billion, implying another 12% sequential gain, and full-year revenue is expected to grow more than 40% in U.S. dollars.
Nvidia and AMD's outlook supports that momentum. In its fiscal first quarter, Nvidia reported 85% year-over-year revenue growth and still expects cumulative Blackwell- and Rubin-related revenue of $1 trillion from 2025 through 2027. Meanwhile, AMD expects the AI accelerator market to reach $1.4 trillion by 2030, while the market for server central processing units (CPUs) tops $200 billion -- more than 50% growth over the same period.
NYSE: TSM
Key Data Points
TSM's valuation is more reasonable after the dip
In the recent Morgan Stanley Hard Lessons interview, Druckenmiller said, "What would be exciting about developing a hedge fund portfolio right now is the one thing I'm sure of -- there's massive disruption and massive change ahead."
TSMC CFO Wendell Huang echoed that sentiment recently, stating the company is "well-positioned to capture the multi-year structural demand from the industry megatrends of 5G, AI, and HPC."
Druckenmiller spotted the AI opportunity early, buying a large stake in Nvidia in 2022, which he later sold to rotate into other tech stocks. In addition to TSMC, he currently holds positions in Intel, Sandisk, and Broadcom, among others, suggesting he sees upside in CPUs, data storage, and custom AI accelerators (XPUs).
One near-term issue: TSMC is ramping up investment in next-generation chip technology, which could pressure gross margins. That could be a near-term drag on earnings, which Druckenmiller might have foreseen in the first quarter when he trimmed the position.
But the recent sell-off in TSMC makes it more attractive. The stock is trading at a reasonable 24 times forward earnings, with analysts projecting annualized earnings growth of about 35% in the years ahead. TSMC makes chips for multiple tech companies, making it one of the best stocks to profit from growing AI infrastructure spending.
