Core Insights - Wedgewood Partners anticipates stronger market volatility in the coming years and has moderated its enthusiasm for investments [1] - The Wedgewood Composite returned -1.8% in Q4 2025, underperforming compared to the S&P 500's 2.7%, Russell 1000 Growth Index's 1.1%, and Russell 1000 Value Index's 3.8% [1] - Year-to-date, the Composite gained 4.3%, significantly lower than the indexes' returns of 17.9%, 18.6%, and 15.9% respectively [1] - Poor stock selection, valuation corrections of past performers, and underweighting in AI stocks contributed to the underperformance [1] - In 2026, crowded AI investments and stretched valuations are expected to pressure prudent investment decisions [1] Company Performance - Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was highlighted as a key performance contributor in Wedgewood's Q4 2025 investor letter [2] - TSMC's one-month return was 16.75%, and its shares gained 61.89% over the last 52 weeks [2] - As of January 16, 2026, TSMC's stock closed at $342.40 per share, with a market capitalization of $1.776 trillion [2] Industry Insights - TSMC is recognized by industry leaders like Broadcom and Nvidia as a "precious source" in silicon manufacturing, crucial for the AI era [3] - The company has doubled its high-performance computing (HPC) revenues to over $65 billion in the past six quarters, more than tripling since late 2021 [3] - TSMC continues to demonstrate pricing power, which is expected to drive excellent returns on capital as it accelerates capacity buildout in the coming years [3]