Key Takeaways:
- The artificial intelligence (AI) trend is expected to continue to power the market in 2026, with several excellent stocks to invest in.
- Nvidia, Broadcom, and Taiwan Semiconductor Manufacturing are the top three AI stocks to buy in January.
- These companies are well-positioned for growth due to their involvement in AI infrastructure, custom AI chip design, and advanced logic chip manufacturing.
- Analysts forecast significant revenue growth for these companies, with Nvidia’s CUDA software platform and Broadcom’s ASIC technology being major drivers.
Introduction to AI Stocks
The artificial intelligence (AI) trend is showing no signs of slowing down, and investors are taking notice. As the demand for AI-powered technologies continues to grow, companies like Nvidia, Broadcom, and Taiwan Semiconductor Manufacturing are poised to benefit. According to the article, "Nvidia remains the king of AI infrastructure, as its graphics processing units (GPU) are the primary chips powering the AI data center buildout." This is due in part to the company’s "secret sauce," which is the ecosystem it has built around its chips. As the article notes, "the company smartly seeded its CUDA software platform into universities and research labs that were conducting early work on the technology." This has led to a generation of developers being trained on its software, with most foundational AI code being written on its platform, optimized for its chips.
Nvidia’s Dominance
Nvidia’s dominance in the AI infrastructure space is expected to continue, with the company’s recent acquisition of SchedMD only widening its software moat. The acquisition gives Nvidia control over the open-source platform Slurm, which is used to help manage GPUs. Additionally, the company’s proprietary interconnect system, NVLink, allows its chips to act as a single powerful unit, giving the company a networking edge. As the article states, "Nvidia’s recent acquisition of SchedMD will only widen its software moat as it gives it control over the open-source platform Slurm, which is used to help manage GPUs." This is a significant advantage for Nvidia, as it allows the company to maintain its position as a leader in the AI infrastructure space.
Broadcom’s Custom AI Chips
As companies look for cheaper alternatives to Nvidia’s GPUs, they are turning to Broadcom to help them design custom AI chips. Broadcom is at the forefront of ASIC (application-specific integrated circuit) technology, which are pre-programmed chips that are hardwired to perform specific tasks. While they lack the flexibility and adaptability of GPUs, they can have performance and cost efficiency advantages. The article notes that "Broadcom helped Alphabet develop its highly successful tensor processing units (TPUs), which has led to other companies flocking to its services, including such notable names as Meta Platforms and OpenAI, among others." This is expected to lead to huge growth for Broadcom, with analysts forecasting $50 billion in AI revenue in fiscal 2026 and $100 billion in fiscal 2027.
Taiwan Semiconductor Manufacturing’s Growth
The one company that is poised to benefit from increasing demand for both GPUs and AI ASICs is Taiwan Semiconductor Manufacturing (TSM). The company has a near monopoly on making advanced logic chips and manufactures chips for both Nvidia and Broadcom. As the article states, "TSMC is currently the only foundry that can manufacture smaller node chips at high yields (minimal defects) at scale." This gives the company strong pricing power, with TSMC increasing its prices by more than 15% on average since 2019. The company has reportedly told customers it will continue to hike its prices over the next four years, starting in 2026.
Conclusion
In conclusion, the AI trend is expected to continue to power the market in 2026, with Nvidia, Broadcom, and Taiwan Semiconductor Manufacturing being the top three AI stocks to buy in January. These companies are well-positioned for growth due to their involvement in AI infrastructure, custom AI chip design, and advanced logic chip manufacturing. As the demand for AI-powered technologies continues to grow, investors would be wise to consider adding these stocks to their portfolios. As the article notes, "the company’s secret sauce is the ecosystem it has built around its chips," and this ecosystem is expected to drive growth for Nvidia and other AI-focused companies in the coming years.
https://www.fool.com/investing/2026/01/05/3-best-artificial-intelligence-stocks-to-buy-in-ja/
