Daniel Loeb's hedge fund Third Point bought heavily into TSMC last quarter, a vote of confidence in the AI chip boom that is good news for chip investors.

• Third Point raised its TSMC holding by 67% during the second quarter, after profits at the chipmaker jumped 77% from a year earlier.
• TSMC beat what analysts expected on both profit and sales, and July sales were up sharply again.
• The reason is AI: demand for AI chips is strong enough that TSMC just raised its spending plans for new plants to a record level.
• The company expects fat profit margins to hold through the current quarter.
• The stock is still in a long uptrend but has cooled off lately, trading slightly below its recent averages while sitting well above its longer-term trend line.

Outlook: As long as AI chip orders keep coming, TSMC's earnings should stay strong, though the stock may drift sideways in the near term after its big run.