4 Prospective Artificial Intelligence Processor Shares to Purchase Immediately
AI infrastructure spending is set to explode this year, with heavy hitters like Amazon, Microsoft, Alphabet, and Meta Platforms collectively budgeting an eye-popping $255 billion in capital expenditures. This spending spree is largely focused on enhancing their AI infrastructure capabilities. Meta Platforms alone is planning to shell out up to $65 billion on AI infrastructure, while a Japan-led consortium, including Softbank and OpenAI, has pledged a staggering $500 billion over the next few years.
Let's take a closer look at the semiconductor stocks poised to profit from this AI infrastructure boom.
Nvidia (NVDA -4.05%)
Nvidia is the kingpin of graphics processing units (GPUs), which are the backbone of AI training and inference due to their blazing-fast processing speeds. Initially designed for gaming, Nvidia's GPUs have since found wider applications through its CUDA software program. Today, Nvidia's CUDA X platform offers AI-specific GPU-accelerated microservices and libraries, cementing its position as a major AI infrastructure player. Nvidia's near-monopolistic 90% market share in the GPU space means it's primed for significant gains as AI infrastructure spending ramps up.
The stock is also attractively priced, boasting a forward price-to-earnings (P/E) ratio of 25 times 2025 analysts' estimates and a reasonable price/earnings-to-growth (PEG) of 0.5.
Broadcom (AVGO -3.56%)
While Nvidia commands the mass merchant GPU market, Broadcom has carved out a niche in custom AI chips. These application-specific integrated circuits (ASICs) may lack the versatility of GPUs, but they generally offer better performance and power efficiency for specific tasks. Broadcom secured its first notable custom AI chip customer in Alphabet, helping design its Tensor Processing Unit (TPU) known as Trillium. Since then, it has added other big-name clients like Meta Platforms, ByteDance, OpenAI, and most recently, Apple.
Broadcom estimates that its top three AI chip customers alone could deploy up to 1 million chips by 2027, representing a potential $60 billion to $90 billion revenue opportunity. While Nvidia will undoubtedly benefit from some of this revenue with its GPUs, Broadcom also stands to gain significantly with its custom AI chip expertise.
Additionally, Broadcom manufactures components essential for AI infrastructure, such as switches and network interface cards (NICs), providing another lucrative revenue stream.
Advanced Micro Devices (AMD -2.92%)
Second only to Nvidia in the GPU space, Advanced Micro Devices (AMD) has forged a niche with its AI-inference GPUs. As AI adoption accelerates, so too does the demand for these high-performance chips. AMD excels in data center CPUs, as its EPYC CPUs have gained significant market share in the data center space. Last quarter, it reported a market share that exceeded 50% at hyperscalers, referring to companies that operate massive data centers.
While the number of CPUs utilized in AI infrastructure doesn't approach the number of GPUs, they still play a crucial role. AMD's strong position in CPUs and the growth of both its CPU and GPU offerings make it a compelling AI infrastructure stock to consider.
Taiwan Semiconductor Manufacturing (TSM -0.93%)
As AI chip demand surges, Taiwan Semiconductor Manufacturing (TSMC) steps in to satisfy this growing need. TSMC is the world's leading semiconductor contract manufacturer, catering to industry giants like Apple, Nvidia, and Broadcom. TSMC's expertise in chip manufacturing has earned it valued partnerships with its clients, allowing it to command strong pricing power.
TSMC has also expanded its manufacturing capacity to keep pace with demand, building new facilities in the U.S. and Japan. The stock is also relatively inexpensive, trading at a forward P/E of 22 times and a PEG of below 0.8.
These major tech companies' investments in AI infrastructure offer lucrative opportunities for semiconductor stocks with ties to AI chips. Companies like Nvidia, Broadcom, Advanced Micro Devices, and Taiwan Semiconductor Manufacturing are well-positioned to reap the benefits of this rapidly expanding market.
Nvidia's position as a major AI infrastructure player, driven by its 90% market share in the GPU space and AI-specific offerings, could be significantly boosted as AI infrastructure expenditures increase. With an attractive valuation of a forward P/E ratio of 25 times 2025 analysts' estimates and a reasonable PEG of 0.5, Nvidia's stock is poised for gains.
Broadcom's custom AI chips, which offer better performance and power efficiency for specific tasks, have secured notable clients like Meta Platforms and Alphabet. The potential revenue opportunity from these top three clients alone is substantial, and Broadcom's components essential for AI infrastructure, such as switches and network interface cards (NICs), provide additional revenue streams.
Advanced Micro Devices (AMD) is well-positioned in the AI infrastructure market with its strong position in data center CPUs and high-performance AI-inference GPUs. As AI adoption accelerates, AMD's EPYC CPUs have gained significant market share in the data center space, making it a compelling AI infrastructure stock to consider.
Taiwan Semiconductor Manufacturing (TSMC) plays a crucial role in the AI chip market by satisfying the surging demand with its expertise in chip manufacturing. TSMC's valued partnerships with industry giants like Apple, Nvidia, and Broadcom, along with its strong pricing power and reasonable valuations, make it an attractive option for investors in the AI infrastructure market.
