Cathie Wood recently made purchases in the artificial intelligence (AI) chip sector, excluding Nvidia, with the specific companies being her focus.

Cathie Wood recently made purchases in the artificial intelligence (AI) chip sector, excluding Nvidia, with the specific companies being her focus.

In the rapidly evolving AI market, Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing Company (TSMC) have emerged as key players, each offering distinct but complementary roles.

Advanced Micro Devices (AMD) is recognized as a significant player in the AI chip sector, with sales expected to grow to $31.8 billion in 2025 and $37.4 billion in 2026. Despite a strong performance in the first half of 2025, AMD's valuation is relatively high, trading for roughly 36 times forward earnings. This high valuation, coupled with fierce competition, especially from Nvidia, may deter some cautious investors.

On the other hand, TSMC is seen as a cornerstone supplier in the global AI semiconductor industry, manufacturing critical AI chips for major players like NVIDIA and AMD. TSMC's AI-related revenue is forecast to grow at a 45% CAGR, potentially reaching $90 billion by 2029, driven by its leading-edge 3nm and upcoming 2nm/1.6nm process nodes that offer significant speed and power efficiency improvements. TSMC's valuation is considered reasonable, with a forward P/E ratio around 25.

Cathie Wood’s Ark Invest has expanded its holdings in both TSMC and AMD, reflecting confidence in their pivotal roles in AI infrastructure. Ark Invest's growing stakes in both companies signal a strategic bet on the AI-driven semiconductor market, with TSMC offering a relatively stable manufacturing platform and AMD providing growth potential but with higher valuation risk.

This dual approach allows Ark Invest to participate in the broader AI hardware ecosystem, mitigating risk by not relying solely on chip designers or manufacturers alone. TSMC's ongoing investments in geographic expansion may mitigate concerns over China's impact on the company's growth.

In conclusion, TSMC is widely viewed as a strong long-term investment in AI due to its critical manufacturing role, technological leadership in advanced nodes, and reasonable valuation amid growth. AMD presents exciting growth opportunities in AI chip design but at a higher valuation and with stiffer competition, implying that investors should be mindful of timing entry points. Cathie Wood’s Ark Invest reflects this nuanced view by increasing exposure to both, leveraging TSMC’s steady infrastructure play and AMD’s innovative chip development to harness the AI market’s expansion.

Investors interested in the AI semiconductor space may consider TSMC as a relatively lower-risk manufacturing play central to AI hardware supply chains, while AMD offers higher growth potential tied closely to design innovation and AI software integration, albeit with greater competition and valuation risk.

Investors interesting in the AI semiconductor space may find TSMC an attractive choice due to its critical manufacturing role, ongoing technological advancements in data-and-cloud-computing via leading-edge process nodes, and a reasonable valuation, making it a potential lower-risk investment opportunity. On the other hand, AMD, with its significant growth potential in AI finance through innovative chip design and close ties to AI software integration, presents higher growth opportunities, but with stiffer competition and elevated valuation risk.

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