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AI infrastructure spending is estimated to reach up to $4 trillion in five years.
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As the leading chip supplier for data centers, Nvidia is well positioned to benefit.
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Broadcom just won a $10 billion custom chip deal with a major AI customer.
Leading tech companies are spending billions on data centers to support growing demand for artificial intelligence (AI) compute capacity. AI chip leader Nvidia (NASDAQ: NVDA) recently said it expects spending on AI infrastructure to reach between $3 trillion to $4 trillion by 2030.
This estimate suggests the current bull market for tech stocks could extend for several more years. If your portfolio is light on AI exposure, here are two chip stocks to consider buying right now.
For investors looking for the best chip stock to benefit from this opportunity, Nvidia still has to be considered the top choice. It's the most valuable company in the world for a reason. It continues to grow at impressive rates, as its graphics processing units (GPUs) remain the benchmark for AI workloads.
Nvidia's latest Blackwell chips are experiencing robust demand. In the most recent quarter, management said the Blackwell platform grew 17% sequentially over the previous quarter. Strong demand contributed to the company's total revenue increase of 56% over the year-ago quarter.
Nvidia's largest customers are the big tech giants, including Meta Platforms, Amazon, and Google Cloud. These companies have tens of billions of dollars they can afford to spend on AI infrastructure, which benefits Nvidia. Google alone plans to spend $85 billion this year on data centers and technology to support its growth.
Nvidia's advantage can be seen in how leading cloud service providers are transitioning to Nvidia's new Blackwell GB300. Management described it as a "seamless" upgrade over the shared architecture, software, and physical footprint of the GB200. The GB300 is a liquid-cooled rack that houses 72 Blackwell Ultra GPUs and 36 Arm-based Nvidia Grace central processing units (CPUs).
Large data centers install thousands of these racks to run AI training and inference workloads, and Nvidia's shareholders are cashing in. "The scale and scope of these build-outs present significant long-term growth opportunities for Nvidia," CFO Colette Kress said on the fiscal Q2 earnings call.
Nvidia is one of the most profitable companies in the world, with $86 billion in trailing-12-month net income. The high margins Nvidia earns on its data center business should translate to significant earnings growth and return potential for investors as spending on AI infrastructure increases.