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Nvidia and Taiwan Semiconductor Manufacturing are both benefiting from massive data center capital expenditures.
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Alphabet's stock is getting no respect from the market.
Although the market has had a sharp recovery from its lows in April and May, there are still plenty of stocks worth buying here. The long-term outlook of the economy seems to be strong, and as more tariff deals get struck, the uncertainty about future tariff policy decreases.
Regardless of what happens, I still think these three stocks are excellent choices to buy right now, as there are secular trends that can push them higher, beating the market along the way.
Nvidia (NASDAQ: NVDA) and Taiwan Semiconductor Manufacturing (NYSE: TSM) are benefiting from the same tailwind: data center buildouts. The demand for AI computing power is massive, which requires companies to heavily invest in data center infrastructure to meet the demand. Nvidia graphics processing units (GPUs) are the gold standard for computing devices in these data centers, and any competition that arises will be directly compared to these units.
Furthermore, Nvidia recently got another boost with the announcement that the U.S. government will approve its export license for H20 chips, a product specifically designed to meet export regulations to China. The return of this market for Nvidia can't be overstated, as the second quarter of fiscal year 2025's forecasted revenue growth would have been 77% if it could have sold H20 chips in the quarter, instead of the 50% management guided for.
Looking forward, Nvidia expects massive data center growth, citing one projection that expects data center capital expenditures to rise from $400 billion in 2024 to $1 trillion by 2028. That's huge growth and is a big reason why Nvidia is an excellent stock to buy right now.
Taiwan Semiconductor benefits from this same tailwind and is also Nvidia's primary chip supplier. Nvidia is a fabless design company, which means that it designs chips, then outsources production to a company like TSMC. I like Taiwan Semiconductor in addition to Nvidia because there are competing technologies with GPUs arising (namely custom-designed AI accelerators) that could be a challenge to Nvidia in the future. While Nvidia is still strong and all indications point toward impressive growth, Taiwan Semiconductor is a hedge against Nvidia losing market share, as it's highly likely that TSMC will still be the chip foundry for new technology.