4 Phenomenal Chip Companies to Ride the Artificial Intelligence (AI) Investing Wave

Keithen Drury, The Motley Fool

Mon, Mar 17, 2025, 4:15 AM 5 min read

Despite the marketplace sell-off centered astir tech stocks, investors request to support their absorption connected the agelong term. We're inactive successful the aboriginal innings of the AI concern wave. We've hardly scratched the aboveground of integrating AI into concern and regular life, and determination volition beryllium much improvement successful this abstraction implicit the adjacent 5 years.

As a result, I deliberation investors request to look astatine which stocks look similar beardown bargains, arsenic the marketplace is afloat of galore opportunities to acquisition the champion AI stocks connected sale.

I'm focusing connected 4 companies that are cardinal suppliers successful the AI race: Taiwan Semiconductor (NYSE: TSM), ASML (NASDAQ: ASML), Nvidia (NASDAQ: NVDA), and Broadcom (NASDAQ: AVGO). These are captious companies and without them, the AI gyration wouldn't look the same.

I'll commencement with Taiwan Semiconductor (TSMC), arsenic each roads pb to it. Taiwan Semiconductor is the world's starring spot foundry, and clients similar Broadcom and Nvidia travel to it with spot designs that they privation to person fabricated. Because TSMC has starring exertion and a beardown way grounds for innovation, it's the apical enactment successful this space, which gives it large penetration into what trends are occurring successful the spot industry.

Over the adjacent 5 years, Taiwan Semiconductor's absorption expects AI-related gross to turn astatine a 45% compound yearly maturation complaint (CAGR) pace. That's monster growth, but it makes consciousness successful the expansive strategy of things. TSMC expects its gross compound yearly maturation complaint to attack 20%, which is fantastic considering the company's size.

This monolithic request is besides wherefore Taiwan Semiconductor announced an further $100 cardinal investment, connected apical of the $65 cardinal it already committed, successful gathering much facilities successful the U.S. TSMC's absorption said the institution is gathering wherever the request is, and with its U.S. accumulation facilities already selling retired capableness done 2027, it's wide that the U.S. is simply a large spot to physique caller factories.

This besides boosts ASML, arsenic ASML makes machines that each high-end spot fabricator needs. ASML's apical instrumentality is an utmost ultraviolet (EUV) lithography instrumentality that helps laic the microscopic electrical traces connected chips. Nobody successful the satellite has ASML's technology, giving it a technological monopoly status. As a result, erstwhile TSMC announces capableness expansion, you should automatically deliberation that ASML volition benefit.

Nvidia and Broadcom are ample customers of TSMC, and they are a ample portion of the crushed it is projecting a monolithic summation successful AI-related gross growth. Nvidia makes graphics processing units (GPUs) that are incredibly utile for handling ample and analyzable computing tasks similar AI training. Nvidia has a beardown grip connected this marketplace and shows nary signs of slowing down.