Loeb and Druckenmiller Exit Broadcom, Shift Into TSM on Concentration Risk
Three of Wall Street's most prominent hedge funds sold Broadcom and added Taiwan Semiconductor in the second quarter, signalling that even rapid AI-driven growth is no longer enough when customer concentration and margin pressure mount.
Second-quarter 13F filings disclosed late last week show that Dan Loeb's Third Point and Stanley Druckenmiller's Duquesne Family Office completely exited their Broadcom positions while adding to their holdings in Taiwan Semiconductor Manufacturing. David Tepper's Appaloosa Management was the sole exception, building fresh stakes in both names.
The rotation is stark. Third Point sold all 50,000 Broadcom shares and added 185,000 TSM shares, bringing its position to 460,000 shares worth roughly $220 million. Duquesne dumped its entire 195,955-share Broadcom stake and added 94,400 TSM shares, lifting its holding to 589,680 shares valued near $282 million. Appaloosa, meanwhile, added 322,500 TSM shares to reach 1.65 million shares worth approximately $788 million and opened a new 150,000-share Broadcom position valued at about $57 million.
Why funds walked away from a strong earnings story
Broadcom reported 48% revenue growth with AI-related sales surging 143%, figures that would typically anchor a conviction holding. Yet the filings suggest managers focused on two structural concerns: heavy dependence on a handful of customers and roughly 230 basis points of margin compression. The concentration risk tied to fewer than six major buyers appears to have outweighed the top-line momentum.
The performance gap between the two stocks has reinforced the trade. TSM has gained 41% year to date, while Broadcom suffered an 8% drop in a single recent week, underscoring the volatility that accompanies its narrower revenue base.
Druckenmiller's broader semiconductor reshuffle
Druckenmiller's moves extended well beyond the Broadcom-TSM swap. Duquesne exited Intel (411,400 shares), Micron (23,400) and Lattice Semiconductor (323,135), while adding 490,000 shares of STMicroelectronics. The fund also opened new positions in Lam Research (43,600 shares), AMD (72,900), Entegris (118,300) and Rambus (173,000), tilting toward process equipment and memory-interface specialists over legacy chipmakers.
Loeb made his own sweeping changes. Third Point exited Lam Research, KLA, the VanEck Semiconductor ETF and its entire 190,000-share NVIDIA position, while adding 18,000 shares of ASML. The pattern points to a preference for equipment suppliers with broad, multi-cycle demand over individual chip designers exposed to single-product or single-customer cycles.
What investors should weigh
These filings are snapshots as of June 30, not live trading records, and portfolio values reflect price moves as much as active buying or selling. Still, the directional signal from managers with long track records is difficult to dismiss. The consensus appears to be shifting toward TSM's diversified foundry model, where growth is spread across hundreds of customers and multiple process nodes, rather than concentrated in a few hyperscale AI buyers.
Tepper's willingness to hold both names suggests the debate is not settled. For investors tracking institutional positioning, the key question is whether Broadcom can address its margin trajectory and reduce reliance on a small buyer pool before the next reporting cycle. Until then, the smart-money rotation favours the company that sells shovels to every miner rather than betting on one gold rush.
