We recently compiled a list of the 10 AI News You Should Not Miss. In this article, we are going to take a look at where Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) stands against the other AI stocks.

Insights on AI's Potential and Its Evolving Capabilities

AI is rapidly advancing, with significant strides being made toward achieving more powerful and capable systems. While challenges and limitations have arisen along the way, the field is still evolving and finding innovative solutions to overcome obstacles. As AI systems grow increasingly capable, they are expected to perform tasks with human-level proficiency which can create new opportunities for efficiency and problem-solving.

In an interview with CNBC, Dario Amodei, co-founder and CEO of Anthropic, discussed the ongoing developments in AI and emphasized that while past challenges have seemed like barriers, they were often overcome through innovations. He expressed confidence that AI is on track to achieve powerful capabilities in the next few years.

Amodei highlighted Anthropic's progress in creating AI that can autonomously operate computers, which is a step toward the broader goal of building a "virtual collaborator" by 2025, which would assist with different tasks. Regarding competition, he noted that while processing power is crucial, it’s not the only factor, as each AI model has its unique strengths. He mentioned Claude's popularity, especially for its personable interactions, while mentioning a study where Claude outperformed other models in gaining radiologists' trust.

AI in Software Development and the Path to AGI

Amodei's vision for Anthropic also aligns with the rapid advancements in AI that are transforming software development. According to the report: The second wave of AI coding is here, by MIT Technology Review, generative AI is quickly advancing in software development, especially in coding. Tools like GitHub Copilot and AI chatbots such as Claude and ChatGPT are already helping millions of developers with tasks like debugging and code generation. Moreover, startups like Zencoder and Poolside are taking this further as they are creating systems that can prototype, test, and fix code. These tools aim to go beyond autocomplete by understanding both the syntax and functionality of code to mimic the human coding process.

While some believe AI could bring us closer to artificial general intelligence, others argue that large language models are not suited for tasks requiring precise logic. Companies like Merly are focusing on intermediate representations of code to address this. The report states that, as AI tools evolve, developers will increasingly rely on them for faster prototyping, bug fixing, and code generation and shift their roles from coders to managers of AI-driven processes. This could reduce the need for large teams of programmers in the future.

For this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. We listed the stocks in ascending order of their hedge fund sentiment taken from Insider Monkey’s database of 900 hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

A close-up of a complex network of integrated circuits used in logic semiconductors.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)

Number of Hedge Fund Holders: 158

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) produces integrated circuits and semiconductor devices, offering a wide range of wafer fabrication processes for various industries, including computing, smartphones, IoT, and automotive.

On January 17, Taiwan Semiconductor Manufacturing Company’s (NYSE:TSM) CEO, C.C. Wei said that the company's new U.S. plant in Arizona is facing significant delays and challenges due to complex compliance issues, local construction regulations, and supply chain gaps, Reuters reported. The process of obtaining permits has taken twice as long as in Taiwan, making it unlikely that the U.S. plant will receive the most advanced chip technology before Taiwan. Despite these issues, including a shortage of skilled workers and high chemical supply costs, Wei expressed confidence that the Arizona plant would eventually produce high-quality chips. TSMC has received strong support from the U.S. government as part of efforts to diversify chip production outside Asia, the report states.

Overall TSM ranks 3rd on our list of the AI stocks you should not miss. While we acknowledge the potential of TSM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.

Disclosure: None. This article is originally published at Insider Monkey.