This year has offered no shortage of market-moving headlines shaping investor sentiment. Mixed job reports, new tariffs fueling turbulence in U.S. trade policy, and ongoing uncertainty around Federal Reserve decisions have all contributed to a difficult backdrop for identifying compelling investment opportunities.

Fortunately, quarterly disclosures from Wall Street’s most seasoned investors provide a window into where the “smart money” is moving. Every quarter, investment firms managing over $100 million are required to file a Form 13F with the Securities and Exchange Commission (SEC). This documentation itemizes which stocks firms bought and sold during the most recent quarter — offering valuable insight into institutional positioning.

One of the more interesting moves that came this quarter was from the Duquesne Family Office, led by billionaire investor Stanley Druckenmiller. According to the firm’s second-quarter 13F, Druckenmiller initiated a new position in Viking Therapeutics (VKTX 4.53%) — a pharmaceutical stock that has plummeted by 35% so far in 2025.

Let’s unpack what may have compelled Druckenmiller to buy the dip in Viking and assess if now is a good time for investors to follow his lead.

Viking could be an asymmetric bet

An asymmetric investment opportunity occurs when the potential upside far outweighs the potential downside. Venture capital offers a textbook example: Most early-stage companies fail, but a single unicorn can generate enough returns to offset losses across the entire fund.

Viking can be viewed through this same lens. The company is advancing a pipeline of obesity and weight-management medications. At the moment, this pocket of the healthcare realm is dominated by a duopoly — Eli Lilly and Novo Nordisk, the makers of blockbuster GLP-1 treatments Mounjaro, Zepbound, Ozempic, and Wegovy.

While Viking remains in the clinical-trial stage, the U.S. Food and Drug Administration (FDA) approval of even one of its candidates could unlock explosive upside, positioning the company as a disruptive entrant in a lucrative healthcare market.

He may be hedging his existing exposure in this space

Another reason Druckenmiller may have his eyes on Viking is due to some existing exposure to the weight-loss market. According to filings, the Duquesne Family Office already owns Lilly stock, having bought shares for three consecutive quarters.

According to research from Goldman Sachs, the global total addressable market (TAM) for obesity-care medications could reach $120 billion by next decade. Given the size of the market and the dynamics of its fragmented competition, it’s possible that Druckenmiller is merely hedging the existing position in Lilly with one that could become a multibagger should Viking successfully advance its weight-loss drug candidates.

Viking is a speculative takeover candidate

Although Viking has yet to formally break into the weight-management space, its clinical trial data over the past year has shown some encouraging signs.

Still, a key concern for investors is whether the company has the financial resources to manufacture at scale should the company secure FDA approval. On one hand, Viking’s science has demonstrated some promise, but on the other hand, its size raises legitimate questions about its capacity to handle commercialization.

With Lilly and Novo already competing fiercely, and other big pharma heavyweights actively seeking entry into the weight-loss industry, Viking’s pipeline positions it as a compelling acquisition candidate should its therapies progress beyond proof-of-concept.

Is Viking Therapeutics stock a buy?

Whether viewed as a hedge, an acquisition play, or a high-risk/high-reward bet on clinical success, Druckenmiller’s decision to buy Viking stock signals two things: a willingness to embrace uncertainty, as well as a conviction that the obesity-care market is expansive enough to support more than just two incumbents.

For prospective investors, the decision to buy Viking Therapeutics stock ultimately comes down to your personal risk tolerance. For now, Viking’s entire valuation rests on speculation and the hope that its pipeline breaks into a rapidly growing, billion-dollar industry with limited competition.

The trade-offs here should not be overlooked: Viking could emerge as the next breakthrough in weight management, or, just as easily, it could suffer setbacks that consign it to a long list of biotech companies with unrealized potential.

Adam Spatacco has positions in Eli Lilly and Novo Nordisk. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool recommends Novo Nordisk and Viking Therapeutics. The Motley Fool has a disclosure policy.

It’s easy to think that institutional money managers somehow possess knowledge that’s superior to the rest of the investment community. After all, these billionaires are called “smart money” for a reason.

What I find helpful, though, is when portfolio managers admit that they may have made a mistake. To me, this sheds light into how these investors think, and what strategies they may hone in order to mitigate making the same oversight.

Stanley Druckenmiller of the Duquesne Family Office admitted that he sold Nvidia stock far too early — going as far as to say that he made a “big mistake” in doing so.

Since making these comments, Druckenmiller has definitely had multiple chances to get back on the Nvidia train. After all, Cathie Wood of Ark Invest did just that after she too sold the semiconductor darling prior to its epic rally a couple of years ago. Nevertheless, recent filings indicate that Druckenmiller may have accepted his decision with Nvidia and is seeking opportunity elsewhere.

Let’s dig into the new artificial intelligence (AI) chip stock that the Duquesne Family Office just increased its stake in by a whopping 457%. Now may be a lucrative time to follow Druckenmiller’s lead.

What AI stock did Druckenmiller just buy?

Per its most recent 13F filing, the Duquesne Family Office recently plowed into Taiwan Semiconductor Manufacturing (TSM 0.72%) stock. In the table, I’ve summarized the fund’s position in TSMC over the last year:

Data source: Hedge Follow. Table by author.

Sometimes when a hedge fund increases its position in a particular stock, you can begin identifying a pattern by looking at prior filings. In this case, however, I don’t think these dynamics really hold up.

A year ago, Druckenmiller’s portfolio had zero exposure to Taiwan Semi. And while the firm did buy the stock during the previous two quarters, the position itself was relatively nominal. Looked at a different way, the most recent purchase of TSMC stock during Q1 is a clear outlier compared to the previous two quarters.

Why might Druckenmiller like Taiwan Semiconductor stock?

While Taiwan Semi might not receive nearly as much coverage as Nvidia, Advanced Micro Devices, or Broadcom, don’t be fooled by its quiet reputation.

Companies such as Nvidia, AMD, Broadcom, Amazon, Qualcomm, Apple, and many more all design or buy chips and integrated network equipment for AI data centers. Where TSMC comes into play is that they actually manufacture the equipment that is designed by these companies.

So while Nvidia and its cohorts get to sell the best shovels that money can buy during the AI gold rush, Taiwan Semi is in the background actually making the shovels. In other words, a good chunk of the AI chip opportunity hinges on TSMC’s ability to manufacture these products.

What’s even more encouraging is that Taiwan Semi is investing heavily into infrastructure in an effort to maintain its lead over the competition. The company has already built factories here in the U.S., and has plans to double down on this initiative over the next few years. These investments are strategic, as they should allow for more efficiencies and improved supply chain logistics with domestic chip partners — a strategy that I think will further cement TSMC’s market share lead.

TSM Revenue Estimates for Current Fiscal Year data by YCharts

Wall Street seems to be bullish on Taiwan Semi, too. Per these estimates, analysts are forecasting impressive growth across both revenue and profits for TSMC over the next few years. I see these projections as a proxy for continued robust demand for AI chips, and Taiwan Semi’s ability to win business over the competition such as Intel or Samsung.

Is Taiwan Semi stock a buy right now?

Right now, Taiwan Semiconductor’s shares trade at a forward price-to-earnings (P/E) multiple of 20.8 — essentially identical to its five-year average. Given how influential TSMC’s foundry services are to the broader chip narrative, it’s a little perplexing to see the company’s forward valuation ratios trading in line with levels prior to the AI revolution.

I think the recent valuation compression in TSMC can be attributed to two primary factors: uncertainty around tariff policies and geopolitical tensions with China.

TSM PE Ratio (Forward) data by YCharts

While I’ll acknowledge both as potential risk factors, I think the bearish narrative surrounding each of them is overblown. Despite ongoing trade negotiations, demand for AI infrastructure remains incredibly high. These dynamics bode well for TSMC. Moreover, if management were questioning the long-term growth trajectory of the company, I’d be suspicious that it would be looking to expand its footprint beyond Asia.

To me, Taiwan Semiconductor is humming along just fine — and I don’t see its tailwinds slowing down anytime soon. For these reasons, investors may want to follow Druckenmiller’s lead and take advantage of Taiwan Semi’s attractive price levels right now.

More importantly, unlike what Druckenmiller did with Nvidia, TSMC looks primed for years to come, and growth investors may want to hold on tight for the long haul.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Amazon, Apple, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Apple, Intel, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.