2 No-Brainer Artificial Intelligence Stocks to Buy Right Now
AI is leading a new wave in tech investment, and Taiwan Semiconductor Manufacturing Company along with Broadcom are standout stocks. Both companies are well-positioned suppliers to the AI sector, projected to see substantial revenue growth in the coming years. Their market valuations remain appealing, making them compelling buys for investors even now.
Artificial intelligence (AI) is reshaping our tech landscape, both in business and in personal settings. While some investors might feel overwhelmed by the buzz surrounding AI, companies still pour money into it, driven by unrelenting demand. Hence, despite some noise in the market, some stocks are still poised for great returns without inflated valuations.
The two standout contenders right now appear to be Taiwan Semiconductor Manufacturing Company (TSMC) and Broadcom. Each of these tech giants holds a staggering valuation of around $1.1 trillion and are part of the exclusive $1 trillion club. With their current growth and market position, there’s a strong chance they could easily cross the $2 trillion mark in just a few years.
TSMC, a prominent chip manufacturer, does the heavy lifting for top tech firms like Broadcom and Nvidia, who rely on it for sophisticated chip production. This foundry is known for its top-notch performance and advanced technology, granting it a critical role in the tech world. Notably, TSMC doesn’t push its own chips, allowing it to play the field neutrally amidst AI competition.
On the flip side, Broadcom is a sprawling tech conglomerate that offers a variety of products, from software to cybersecurity. However, investors seem particularly intrigued by its AI offerings, especially innovative components like connectivity switches and custom AI accelerators. The spikes in demand for Broadcom’s XPUs during the second quarter of FY2025 underline the growing interest in AI, with a massive 70% boost in AI networking.
Both firms are effectively dodging the bias of any single AI initiative, allowing for profit regardless of which technology is leading the charge. This makes them excellent bets, especially as client investments continue to favor both companies heavily. Strong growth predictions for the future add to their appeal.
Management expects TSMC to see nearly a 20% compound annual growth rate over the next five years, potentially translating into an impressive 150% revenue increase. That’s no small feat for a company of its scale, and the early orders rolling in suggest that investors can have high hopes for TSMC’s trajectory.
Broadcom, not to be outdone, anticipates its AI division could generate between $60 billion to $90 billion in revenues by 2027. Given that it pulled in $4.4 billion from AI-related income in just the last quarter, the growth forecast sounds quite rational. Interestingly, the emphasis appears to shift from training AI to deploying it, making this projected revenue entirely feasible.
The outlook for both firms means that investors might see their stock valuations align with this growth. Broadcom currently holds a forward price-earnings ratio of 37, reflecting considerable success already internalized within its market cost. TSMC, on the other hand, remains more price-conscious in relation to market expectations, pricing similar to broader market averages. This begs the question – is this an undervalued opportunity?
Given the growth potential of both companies within the AI sector, they both still look like smart investments today. Sure, it might have been better to grab shares when they were cheaper a few months back, but the prospects remain promising for these industry players.
In summation, Taiwan Semiconductor Manufacturing Company and Broadcom stand out as prime choices for investors looking to dive into the artificial intelligence space. Both companies are positioned strongly to benefit from AI growth, with promising forecasts backing up their potential. It might have been ideal to invest at lower prices, but even now, both TSMC and Broadcom hold exciting possibilities for future growth.
Original Source: www.fool.com
