Just because an investment is obvious doesn’t mean it’s bad. Here are three companies that are clear leaders in the artificial intelligence (AI) market, which could eclipse $1.8. thousand billion by the end of the decade. That’s up from the current $280 billion, according to Grand View Research.
With so much AI-powered growth still to come, these three stocks are terrific buys right now.
#1 AI Stock to Buy: Nvidia
Savvy investors have named Nvidia (NASDAQ:NVDA) as one of the main beneficiaries of the AI gold rush, and they are right to do so. The semiconductor colossus designs cutting-edge chips that enable the most advanced AI applications. Nvidia’s AI-related sales and profits, in turn, are experiencing meteoric growth.
Nvidia’s growth is breathtaking. Its revenue soared 126% to $61 billion in its 2024 fiscal year, which ended Jan. 28. That helped drive its net profits by a whopping 286% to $32 billion.
The AI chip market is expected to witness rapid growth in the coming years. Technology leaders love Alphabet are investing aggressively to expand their cloud computing networks. At the same time, companies like You’re here are buying massive quantities of Nvidia’s latest chips to power their AI initiatives. Demand for chips that accelerate AI workloads in data centers could increase ninefold to $400 billion by 2027, according to Advanced microsystems‘CEO Lisa Su.
With its new Blackwell processors expected to deliver more powerful performance gains, Nvidia’s innovative chip designs are expected to remain the top choice for AI-focused buyers.
#2 AI Stock to Buy: Taiwan Semiconductor
Chip designers like Nvidia and AMD rely on Semiconductor manufacturing in Taiwan (NYSE:TSM) to make their creations. The global leader in semiconductor foundry services manufactures many of the critical electronic components that are helping power the AI revolution.
More than 500 companies have asked TSMC to manufacture nearly 12,000 different products in 2023. Major end markets include smartphones, automotive technology and consumer electronics.
Yet it’s TSMC’s AI-driven opportunities that investors are most excited about. In April, the company’s net revenue jumped 60% year-on-year to 236 billion New Taiwan dollars, or about $7.3 billion, fueled by growing demand for semiconductor technologies related to AI. This marks a sharp acceleration from TSMC’s sales growth rates of 34% in March and 11% in February.
Investors can expect these strong growth trends to continue. Eager to ensure access to TSMC’s advanced technology, governments are offering the chipmaker billions of dollars in tax breaks to build new manufacturing plants on their borders. TSMC plans to open additional facilities in the United States, Japan and Germany to expand its AI chip manufacturing empire.
#3 AI Stock to Buy: Microsoft
Multibillion-dollar investment in OpenAI push from ChatGPT creator Microsoft (NASDAQ:MSFT) at the forefront of the AI race. This is an extremely valuable position, as evidenced by the tech giant’s $3 trillion market value.
Microsoft uses OpenAI technology to strengthen its own AI offerings. Businesses can access ChatGPT and other major language models through Microsoft’s Azure cloud computing platform. Revenue from Azure and the company’s other cloud services jumped 31% in the quarter ended March 31, driven by growing demand for AI tools.
Additionally, Microsoft is adding AI assistants called “co-pilots” to its popular productivity software. Users report significant productivity and efficiency gains, including over an hour of time saved per week on work-related tasks.
Microsoft is just starting to monetize its AI co-pilots. However, nearly 60% of the 500 largest US companies are already testing these promising AI tools. With Copilot subscription plans starting at $30 per month per user, the tech giant has the opportunity to increase its profits by selling these AI upgrades to its more than 400 million commercial users. Office 365 software suite.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Advanced Micro Devices, Alphabet, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
3 Obvious Artificial Intelligence (AI) Stocks to Buy Now was originally published by The Motley Fool