Key Takeaways
- Nvidia and Taiwan Semiconductor Manufacturing (TSMC) are two leading artificial intelligence (AI) stocks to invest in for the long term.
- Nvidia’s graphics processing units (GPUs) have become the backbone of AI infrastructure, holding an approximate 90% share in the space.
- TSMC is the largest semiconductor manufacturer in the world and has a tight grip on making advanced chips, like GPUs.
- The company sees AI chip demand increasing at an over 40% compound annual growth rate (CAGR) over the next few years.
- Both Nvidia and TSMC are well-positioned to benefit from the ongoing AI infrastructure buildout.
Introduction to AI Stocks
The biggest trend driving the market right now is artificial intelligence (AI), and with the game-changing technology still in its early innings, there’s no reason to think this won’t continue over the next decade. As the demand for AI technology continues to grow, companies like Nvidia and TSMC are poised to reap the rewards. According to the article, "The biggest AI winner thus far has been Nvidia (NVDA +3.24%), and the company is still one of the best positioned to benefit over the next decade." This is due in part to Nvidia’s dominance in the AI infrastructure space, with its GPUs holding an approximate 90% share.
Nvidia’s Position in the AI Market
Nvidia’s position in the AI data center market stems from the ecosystem it has built around its chips. As the article notes, "Its CUDA software platform is where all early AI foundational code was written, and today, the libraries and tools built on top of CUDA to optimize its chips for AI workloads create a huge moat, especially when it comes to large language model (LLM) training." Additionally, Nvidia’s proprietary NVLink interconnect system enables its chips to function as a single, powerful unit, discouraging the mixing and matching of chips in AI clusters. This has made Nvidia a leader in the AI market, with a strong position that is likely to continue well into the future. The company’s recent acquisitions, including SchedMD and Groq, will only serve to widen its software moat and improve its position in the AI inference market.
TSMC’s Role in the AI Value Chain
Another company uniquely positioned to benefit from the ongoing AI data center buildout is Taiwan Semiconductor Manufacturing (TSMC). As the article notes, "TSMC is the largest semiconductor manufacturer in the world and has a tight grip on making advanced chips, like GPUs." This has made TSMC arguably one of the most important companies in the AI value chain, as without it, chip designers like Nvidia would not be able to produce their chips at scale. The company sees AI chip demand increasing at an over 40% compound annual growth rate (CAGR) over the next few years, and it has also been raising prices for its services. As the article quotes, "The company sees AI chip demand increasing at an over 40% compound annual growth rate (CAGR) over the next few years, and it has also been raising prices for its services."
The Future of AI Infrastructure
The future of AI infrastructure is likely to be driven by the ongoing demand for advanced chips and the companies that manufacture them. As the article notes, "Making advanced chips is a difficult process, and Nvidia’s competitors have struggled to manufacture advanced chips with high yields at scale." This has made TSMC a valued partner, working closely with advanced chipmakers to help them shrink the nodes of their chips and increase capacity to meet soaring demand. Both Nvidia and TSMC are well-positioned to benefit from the ongoing AI infrastructure buildout, and investors would be wise to consider these companies for their long-term portfolios. As the article concludes, "Overall, Nvidia is set to continue to reap the rewards from the ongoing AI race and data center buildout that is likely to continue well into the future."
https://www.fool.com/investing/2026/01/02/2-artificial-intelligence-stocks-you-can-buy-and-h/