Best AI Stocks for the AI Revolution

Published Date : 15-06-2025 

The rapid growth in AI spending is set to transform industries, and two leading companies are well-positioned to benefit. Discover why Taiwan Semiconductor Manufacturing and Nvidia are must-buy stocks for AI investors. 

Spending on AI hardware and software is expected to jump nicely in the coming years. Two companies already benefit from the proliferation of AI, and they have the potential to fly higher.

Artificial intelligence (AI) is playing a disruptive role across several industries as the technology allows businesses, governments, and organizations to improve productivity and efficiency with its ability to automate repetitive tasks and take over certain functions. The potential of AI helps explain why its increasing adoption is expected to give global gross domestic product (GDP) a big boost going forward, adding trillions of dollars to the world's economy. Not surprisingly, a lot of money is being spent on AI-related hardware and software to help capture some of this economic potential. Market research firm IDC expects global spending on AI infrastructure to exceed $200 billion by 2028, which would be a nice increase over this year's projected spending of $150 billion.

On the other hand, the research firm expects the AI software platforms market to clock an annual growth rate of almost 41% through 2028. That's why now is a good time to take a closer look at the prospects of two companies that are taking advantage of these lucrative end markets and have the potential to deliver healthy long-term gains for their investors.

Taiwan Semiconductor Manufacturing (TSMC) offers a great way for investors to capitalize on the huge investments in AI infrastructure. Popularly known as TSMC, this Taiwan-based company is the largest semiconductor foundry in the world, fabricating semiconductors on a large scale for major chip designers such as Nvidia, Broadcom, AMD, Marvell Technology, and others.

These customers are seeing terrific growth in sales of their AI chips, and that's having a positive impact on TSMC's financial results. For instance, all the customers mentioned above saw remarkable growth in their AI chip revenue in their latest quarters. Nvidia reported 73% growth in data center revenue for the previous quarter, while Broadcom's AI revenue jumped 46%. A similar story unfolded for Marvell Technology as well, driven by healthy demand for its custom AI processors.

Importantly, all these companies are leaders in their respective segments, and their outlook makes it clear that they will be able to sustain their healthy growth rates. Broadcom, for example, sees a serviceable addressable market worth a whopping $60 billion to $90 billion for its chips over the next three years, and that's excluding the potential revenue it could pull in from the new customers that it is working with.

Nvidia, another leading player in the AI space, has been at the forefront of developing cutting-edge AI technologies. The company's GPUs (Graphics Processing Units) are widely used in data centers and AI applications, making it a key player in the AI hardware market. Nvidia's data center segment, which includes AI and cloud computing, has been a significant growth driver, with revenues surging due to the increasing demand for AI solutions.

The company's recent advancements in AI, such as the introduction of the H100 GPU, further solidify its position in the market. The H100 GPU is designed to handle complex AI tasks, including natural language processing, computer vision, and recommendation systems, making it a valuable asset for businesses looking to enhance their AI capabilities.

In conclusion, the AI market is poised for significant growth, and investors looking to capitalize on this trend should consider Taiwan Semiconductor Manufacturing and Nvidia. Both companies are well-positioned to benefit from the increasing demand for AI hardware and software, and their strong financial performance and innovative technologies make them attractive long-term investments. 

Frequently Asked Questions (FAQS): 

Q: What is driving the growth in AI spending?

A: The increasing adoption of AI across various industries, which improves productivity and efficiency, is driving the growth in AI spending. Market research firm IDC expects global spending on AI infrastructure to exceed $200 billion by 2028.

Q: How does Taiwan Semiconductor Manufacturing (TSMC) benefit from AI?

A: TSMC benefits from AI by fabricating semiconductors for major chip designers like Nvidia, Broadcom, AMD, and Marvell Technology. These companies are seeing significant growth in their AI chip revenue, which positively impacts TSMC's financial results.

Q: What is Nvidia's role in the AI market?

A: Nvidia is a leading player in the AI market, known for its GPUs used in data centers and AI applications. The company's data center segment, which includes AI and cloud computing, has been a significant growth driver, with revenues surging due to the increasing demand for AI solutions.

Q: What are some recent advancements by Nvidia in AI technology?

A: Nvidia has introduced the H100 GPU, which is designed to handle complex AI tasks such as natural language processing, computer vision, and recommendation systems. This further solidifies its position in the AI hardware market.

Q: Why are Taiwan Semiconductor Manufacturing and Nvidia considered must-buy stocks for AI investors?

A: Both companies are well-positioned to benefit from the increasing demand for AI hardware and software. TSMC's role as a leading semiconductor foundry and Nvidia's advancements in AI technology make them attractive long-term investments in the growing AI market. 

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