Consider These Two AI Stocks for Your Portfolio

Published Date : 15-06-2025 

Discover why Taiwan Semiconductor Manufacturing and C3.ai are leading the AI revolution and why they are excellent investments for your portfolio. 

Artificial intelligence (AI) is revolutionizing various industries by automating repetitive tasks and enhancing productivity. The technology's potential is expected to significantly boost global GDP, adding trillions of dollars to the world's economy. Not surprisingly, a lot of money is being invested in AI-related hardware and software. Market research firm IDC projects that global spending on AI infrastructure will exceed $200 billion by 2028, up from the projected $150 billion this year. Additionally, the AI software platforms market is expected to grow at an annual rate of almost 41% through 2028. This makes it an opportune time to explore two companies that are capitalizing on these lucrative markets and offer substantial long-term gains for investors.

1. Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing (TSMC) is a leading semiconductor foundry that fabricates chips for major tech companies such as Nvidia, Broadcom, AMD, and Marvell Technology. These customers are experiencing significant growth in their AI chip sales, which is positively impacting TSMC's financial performance. For example, Nvidia reported a 73% increase in data center revenue in the previous quarter, while Broadcom's AI revenue grew by 46%. Marvell Technology also saw strong demand for its custom AI processors.

The outlook for these companies is promising, with Broadcom projecting a serviceable addressable market worth $60 billion to $90 billion over the next three years. The data center graphics card market is expected to grow at a 30% annual rate over the next decade. TSMC forecasts its AI accelerator revenue to double this year, followed by a compound annual growth rate (CAGR) in the mid-40% range over the next five years. TSMC's revenue in the first four months of 2025 has already increased by 43% compared to the same period last year.

TSMC's 67% share of the global foundry market gives it a significant competitive advantage. Its trailing earnings multiple of 24 makes it an attractive investment, especially considering the 37% gains it has made in the past two months. Investors should consider adding TSMC to their portfolios before it rises further.

2. C3.ai

The adoption of AI software by businesses and governments is a significant tailwind for C3.ai, a pure-play enterprise AI software provider. C3.ai has been in the news for winning contracts, including a recent $450 million contract from the U.S. Air Force for predictive maintenance of aircraft and other assets. In the fiscal year 2025, C3.ai closed 264 agreements with customers, a 38% increase from the previous year. This includes 174 initial production deployments.

C3.ai CFO Hitesh Lath highlighted the company's progress during an earnings call, noting that they have cumulatively signed 346 initial production deployments, with 263 still active. This indicates a strong potential for future growth as these pilot projects convert into long-term contracts.

C3.ai's relationships with key federal agencies and major corporations like ExxonMobil, U.S. Steel, and Bristol Myers Squibb establish it as a credible player in the AI software market. Analysts expect C3.ai's growth rate to accelerate, with projections of profitability in the next couple of fiscal years. The company's stock has gained 27% in the past two months, and its ability to outperform Wall Street estimates suggests it could continue to rise. Investors may want to consider buying C3.ai before it becomes too expensive.

Both TSMC and C3.ai are well-positioned to capitalize on the growing AI market, offering strong potential for long-term gains. Investors should consider adding these stocks to their portfolios to benefit from the AI revolution. 

Frequently Asked Questions (FAQS): 

Q: What is the projected growth in the AI software platforms market?

A: The AI software platforms market is expected to grow at an annual rate of almost 41% through 2028.

Q: Why is TSMC a good investment for AI?

A: TSMC is the largest semiconductor foundry and fabricates chips for major tech companies experiencing significant growth in AI chip sales. Its 67% share of the global foundry market and strong financial performance make it an attractive investment.

Q: What recent contract did C3.ai win from the U.S. Air Force?

A: C3.ai won a $450 million contract from the U.S. Air Force for predictive maintenance of aircraft and other assets, significantly raising the initial contract ceiling from $100 million.

Q: How has C3.ai's revenue grown in the past fiscal year?

A: C3.ai's revenue increased by 25% in the fiscal year 2025, which was a 9 percentage point improvement over its fiscal 2024 growth.

Q: What is the projected profitability of C3.ai in the next couple of fiscal years?

A: Analysts expect C3.ai to become profitable in the next couple of fiscal years, driven by the conversion of pilot projects into long-term contracts and strong customer relationships. 

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