Wall Street Fund Manager: The Most Important Company in the AI Era Is Not NVIDIA, but Taiwan Semiconductor!

Amid the investment frenzy in artificial intelligence, NVIDIA has long been the market focus, but a fund manager overseeing nearly $10 billion in assets offers a different answer: Taiwan Semiconductor is the most indispensable core of the current AI ecosystem.

According to a MarketWatch report on Tuesday, Jonathan Cofsky, co-portfolio manager of the $9.35 billion Janus Henderson Global Technology and Innovation Fund, stated that Taiwan Semiconductor is the fund's largest holding, surpassing NVIDIA to take the top spot. "This is probably the most important company driving AI development right now," he said. In his view, regardless of which chipmaker ultimately prevails, all leading-edge chips are produced at Taiwan Semiconductor, making its irreplaceable status the ultimate beneficiary of AI computing power expansion.

Cofsky's fund has outperformed the S&P 500 Index in terms of annualized returns over both three-year and ten-year periods. He also pointed out that the current boom in AI infrastructure construction is fundamentally different from the internet bubble of the early 2000s—physical constraints on resources and electricity will effectively curb disorderly capital expansion, providing support for this growth cycle.

Taiwan Semiconductor: The "Only Answer" in the Computing Power Race

Cofsky boils down Taiwan Semiconductor's core value to a simple logic: Investors only need to answer one question—"How much computing power will be built in the future?" The answer has nothing to do with specific chipmakers, "because everyone manufactures at Taiwan Semiconductor."

Taiwan Semiconductor is the world's only foundry focused exclusively on manufacturing chips for other companies, mastering the most advanced process technologies. Cofsky emphasizes that regardless of the form AI computing takes, Taiwan Semiconductor is an unavoidable production node, granting it a unique structural advantage throughout the AI industry chain.

Betting on Arm: A New Beneficiary of AI Agent Workflows

In addition to Taiwan Semiconductor, Cofsky revealed that his fund increased its stake in chip architecture design company Arm Holdings earlier this year. The rationale is that AI agent workflows will rely on CPUs (central processing units) far more than previous AI iterations, and Arm boasts the "broadest architecture penetration."

He used a vivid analogy to explain the division of labor between GPUs and CPUs: GPUs are like the "army of workers" executing tasks, while CPUs are the "managers" responsible for overall coordination. AI agents involve extensive "coordination combinations," which is precisely where Arm's strength lies.

Cofsky also noted that Arm is transitioning from a pure IP licensing model to independent chip manufacturing, with Meta as its first customer. "By the end of this decade, the degree of Arm's success as a chip manufacturer will be a key variable worth watching."

Software Stocks: Only 10% to 20% of Existing Players Can Survive the Cycle

Regarding the recent rebound in software stocks, Cofsky remains cautious. He believes the software industry faces disruptive risks from AI, as AI is essentially an automated replacement for labor.

Citing historical patterns, he pointed out that in every disruptive long-term trend—such as the shift of retail from offline to online platforms like Amazon—it typically takes the market four to six years to distinguish winners from losers, and ultimately, only 10% to 20% of the original industry leaders successfully complete the transition.

Based on this, the fund focuses on companies that are "extremely difficult to replicate and can layer AI to generate incremental revenue," including Datadog, Snowflake, and theoretical and design software firms with unique data assets, such as Cadence and Guidewire. "Snowflake and Datadog have already seen a re-acceleration in revenue driven by AI, which is the most positive signal we can see right now," he said. "But we need to observe whether this momentum can sustain."

Contrarian Positioning: The Undervalued Logic of DoorDash

Cofsky also highlighted a currently somewhat overlooked stock—food delivery platform DoorDash. He believes that market concerns about DoorDash are currently centered on the investment cycle it is undergoing and the suppression of consumers by the macroeconomic environment, but these factors are overpriced.

In his view, DoorDash is a founder-led company that is actively expanding into new businesses such as international fresh grocery delivery, and stands to benefit simultaneously from the dividends of generative AI and physical AI, possessing medium-to-long-term layout value.

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