Geoffrey Seiler, The Motley Fool
7 min read
In This Article:
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Nvidia and Broadcom are two of the best plays on the artificial intelligence (AI) infrastructure build-out.
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TSMC has been a vital part of the semiconductor value chain and is set to benefit from increasing AI chip production.
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Palantir Technologies and GitLab are two strong AI software plays.
Artificial intelligence (AI) has the potential to be the most important technological advancement in history, and it still appears to be in its early innings. As such, the space is still one of the most promising places to invest.
When delving down to specific stocks to focus attention on, five of the best AI-related offerings to buy right now are Nvidia (NASDAQ: NVDA), Broadcom (NASDAQ: AVGO), Taiwan Semiconductor Manufacturing (NYSE: TSM), Palantir Technologies (NASDAQ: PLTR), and GitLab (NASDAQ: GTLB). Each company has found a unique niche in the AI sector to exploit, and each has big opportunities ahead.
Let's look at why these are among the best AI stocks to invest in right now for the long term.
Nvidia's graphics processing units (GPUs) have become the backbone of AI infrastructure. These powerful chips are used to help power AI workloads, and demand has been soaring.
The company's wide moat, however, comes from its CUDA software platform. Nvidia launched CUDA two decades ago to allow developers to program its GPUs more easily. It pushed CUDA into universities and research institutions early on, which helped CUDA become the de facto software program for AI developers.
In Q1, the company had an over 90% market share in the GPU space. As a result, where AI infrastructure spending goes, Nvidia is sure to follow. While a slowdown in data center spending would be a risk, right now, demand for AI chips is only getting bigger. This is being driven by cloud computing companies pouring money into AI infrastructure to keep up with demand; large tech companies and AI start-ups spending big to create new foundational AI models; and even countries making large investments to not fall behind in the AI race.
As AI infrastructure spending continues to ramp up, Nvidia remains a clear winner.
Another company taking advantage of the AI infrastructure build-out is Broadcom. Rather than designing GPUs like Nvidia, it's been focused on networking components and helping customers design custom AI chips. It also added a software component when it acquired VMWare.
Thus far, its strategy is paying off. Its Ethernet switches and other networking components help efficiently move data within huge AI clusters, making them an essential part of data center infrastructure. Last quarter, its AI networking revenue soared 70% and accounted for 40% of Broadcom's total AI revenue.
