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Investing in the companies powering artificial intelligence (AI) models is a smart move.
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AI hyperscalers are spending billions on data centers, but are also recouping some of that investment by renting out computing power.
Artificial intelligence (AI) investing remains a primary driver in the market, fueled by massive capital expenditures in data centers by AI hyperscalers. There are numerous AI stocks that investors can consider right now, and this list can serve as a starting point for further research on which AI stocks appear to be great buys.
I've got 10 on my short list for top AI stocks to buy now, but there are likely many more beyond this.
Nvidia (NASDAQ: NVDA) has been a leader in AI investing since its inception, primarily due to its industry-leading graphics processing units (GPUs), which have been widely utilized to train and run AI models. The company projects monster growth for its GPUs over the next five years, as it expects data center capital expenditures to rise from $600 billion this year to $3 trillion to $4 trillion by 2030.
We'll see if this projection pans out, but there's still massive computing demand for AI, and Nvidia is the top provider in this segment.
Another company heavily involved in this sector is Broadcom (NASDAQ: AVGO). Broadcom has two major products being used in AI data centers: its connectivity switches and its custom AI accelerators. The biggest growth story for Broadcom is these custom AI accelerators, which are alternatives to Nvidia's GPUs that are designed in conjunction with the end user.
This could be a huge market for Broadcom, and makes me bullish on the stock.
Neither Nvidia nor Broadcom can produce chips themselves, so they outsource the fabrication work of their designs to Taiwan Semiconductor (NYSE: TSM). TSMC is the world's largest chip foundry and has established a reputation for continuous innovation and delivering best-in-class product yields.
It's slated to capitalize on the massive AI arms race spending, regardless of which companies are using computing devices, making it an excellent AI investment on the chip side of AI.
ASML (NASDAQ: ASML) is a key equipment supplier to chip foundries, such as Taiwan Semiconductor, as it holds a technological monopoly with its primary product: the extreme ultraviolet (EUV) lithography machine. This allows chip manufacturers to lay down microscopic electrical traces. Without ASML, none of the cutting-edge chip technology we know today would be possible.