Core Viewpoint - Appaloosa's chief, David Tepper, has shifted his investment focus from Oracle to Taiwan Semiconductor Manufacturing Company (TSMC), highlighting the importance of companies critical to AI supply chains [1][5]. Investment Decisions - Tepper has been selling Oracle shares for five consecutive quarters, reducing his stake by 93% from a peak of 2,300,000 shares at the end of March 2024 [6][7]. - Despite selling Oracle, the stock has doubled in value over the past six months, driven by strong sales guidance and a 359% increase in remaining performance obligations (RPOs) to $455 billion [8][9]. - Tepper's selling of Oracle may have been influenced by profit-taking, as the stock rallied nearly 50% from March to November 2024 [10]. Market Conditions - The S&P 500's Shiller price-to-earnings (P/E) ratio approached 40, indicating a historically high valuation, which may have contributed to Tepper's decision to sell [11]. - Oracle has missed consensus earnings per share (EPS) expectations in three of the last four quarters, potentially affecting investor sentiment [12]. Shift to AI Hardware - In the June-ended quarter of 2025, Tepper began purchasing AI hardware stocks, including Nvidia and 8 million shares of Intel [14][15]. - TSMC is viewed as a critical player in the AI supply chain, with its CoWoS technology essential for high-compute data centers [16]. TSMC's Growth Potential - TSMC's diversification into wireless chips, IoT devices, and next-generation automobiles provides steady cash flow, complementing its growth in advanced AI chips [17]. - Tepper's investment in TSMC occurred at a forward P/E ratio of 12 to 18, presenting an attractive entry point given the company's projected solid double-digit sales growth [18]. - Tepper purchased 755,000 shares of TSMC in Q2 2025, bringing his total holdings to 1,025,000 shares [19].

Core Viewpoint - Stanley Druckenmiller has shifted his investment focus from Nvidia and Palantir to Taiwan Semiconductor Manufacturing Company (TSMC), indicating a strategic pivot within the AI sector as he seeks to capitalize on different opportunities in the technology landscape [5][15]. Investment Activity - Druckenmiller's Duquesne Family Office sold all shares of Nvidia (9,500,750 shares) and Palantir (769,965 shares) between June 30, 2023, and March 31, 2025, respectively [9][12]. - In contrast, during the March-ended quarter, Druckenmiller purchased 491,265 shares of TSMC, increasing his stake by 457% from the end of December [15]. Company Performance - Nvidia's stock has surged by 827% since the beginning of 2023, while Palantir's shares have skyrocketed by 1,920% during the same period [6]. - TSMC is integral to the production of chips for AI-accelerated data centers and is expanding its chip-on-wafer-on-substrate (CoWoS) capacity from 35,000 monthly units in 2024 to an expected 135,000 units by 2026 [16]. Market Dynamics - Nvidia faces increasing competition as many of its largest customers are developing their own AI-GPUs, which could impact its pricing power and gross margins [10]. - Palantir's valuation is under scrutiny, with a price-to-sales (P/S) ratio of 103, significantly higher than historical norms for companies leading in innovation [13]. Diversification and Risk - TSMC's operations are diversified beyond AI chips, producing components for smartphones, wireless devices, and next-generation vehicles, which may mitigate risks associated with a potential AI bubble [18]. - The company is also navigating uncertainties regarding tariffs, particularly as it maintains significant production in Taiwan despite a new facility in Arizona [19]. Valuation Considerations - TSMC's forward price-to-earnings ratio of 18 appears reasonable, but its shares are valued at over 10 times trailing-12-month sales, representing a 16% premium to its average P/S multiple over the last five years [20].