Harvard endowment backs TSMC as largest holding amid AI boom

As of the end of the first quarter of 2026, Taiwan Semiconductor Manufacturing Company (TSMC) has become the largest holding in the Harvard Management Company’s portfolio, with a stake valued at $232,102,708. Harvard’s endowment managers have identified the semiconductor manufacturer as a primary beneficiary of the artificial intelligence revolution, citing its dominant market position and advanced manufacturing capabilities.

TSMC currently derives 74 per cent of its wafer revenue from advanced nodes, defined as 7nm and below. The company reported a 40.6 per cent year-over-year increase in Q1 revenue, with operating margins reaching 58.1 per cent. Gross margins also expanded by 7.4 percentage points compared to the same period last year, reflecting significant pricing power and efficient cost management.

The company has commenced mass production of 2nm chips using nanosheet Gate-All-Around transistors, a development Green Alpha Investment noted in its Q1 2026 investor letter. Initial yields for these chips have reached between 70 per cent and 80 per cent. The N2 node is reported to deliver a 15 per cent performance boost at the same power level, or a 25-30 per cent reduction in power consumption compared to 3nm technology.

New process technologies, including A13 and N2U, are currently in development, positioning TSMC to maintain a technological lead over rivals. Every major AI chip and high-performance processor is produced in the company’s fabs, underpinning its durable competitive moat. Full-year revenue growth is expected to exceed 30 per cent.

Despite the strong fundamentals, the stock trades at a forward price-to-earnings ratio of 26. This valuation represents only a slight premium to the broader tech sector and remains below levels seen in late 2025, suggesting the market has not fully priced in the company’s growth trajectory.