In this article:
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Nvidia -- the chipmaking leader -- continues to maintain a wide moat in the GPU market.
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TSMC is the world's leading foundry, and it continues to benefit from the proliferation of AI chips.
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With a monopoly on the technology used to make advanced chips, ASML is in a strong position.
Artificial intelligence (AI) continues to be a driving theme in this market. One of the smartest ways to continue playing this trend could be with semiconductor-related stocks that are poised to continue to benefit from the ongoing data center buildout.
Let's look at three stocks across three different areas of the semiconductor value chain that should be long-term winners -- and which investors can still scoop up this month.
Nvidia (NASDAQ: NVDA) is still the undisputed leader in AI chips. It has taken an extraordinary market share in graphics processing units (GPUs), which are the primary chips used to train AI models and run inference.
Its dominance isn't the result of simply having better chips but rather the software ecosystem it has built around them. Years ago, Nvidia offered its CUDA software platform for free to universities and research labs, which led to an entire generation of developers being trained on its platform.
This, in turn, led to tools and libraries being built on top of CUDA, creating a wide moat. The reason is that customers would not only need to rewrite a massive amount of code to switch to other chips but also have to retrain their developers on another software stack.
The company is also moving faster than ever. It has shifted to an annual chip launch cycle to stay ahead of competitors, and it's expanding into new growth areas such as autonomous driving and robotaxis. Approval to resume sales of its H20 chips in China adds another potential catalyst, although issues still need to be worked through.
Given its GPU market dominance, wide software moat, and expansion into new AI-driven industries, Nvidia remains one of the best long-term opportunities in the AI space.
While Nvidia gets the headlines, Taiwan Semiconductor Manufacturing (NYSE: TSM), or TSMC, is the quiet force behind the AI boom. It doesn't design chips; it manufactures the most advanced ones for nearly every major semiconductor player in the world, including Nvidia. That makes it the ultimate AI arms dealer.
Manufacturing advanced semiconductors is a difficult business -- just ask Intel, whose foundry business has been piling up losses. However, TSMC's scale and technological expertise are unmatched, making it a vital cog in the semiconductor value chain and an invaluable partner to AI chipmakers.