The development of AI infrastructure may be just beginning.
The artificial intelligence (AI) surge has significantly influenced the semiconductor sector, but this growth might only be in its early stages. As stated by OpenAI CFO Sarah Friar, the expansion of AI infrastructure might render the internet expansion seem capex-light, indicating we are just on the verge of a major upsurge.
Here, we will explore three emerging stocks poised to benefit from this trend.
1. Advanced Micro Devices
Advanced Micro Devices (AMD 2.49%) has historically operated in Nvidia‘s (NVDA 1.65%) shadow. However, a shift in the AI landscape could provide significant opportunities. The focus thus far has been on training extensive models, where Nvidia’s CUDA ecosystem has given it a competitive edge. As the industry transitions to inference, AMD is establishing a crucial position.
2. Broadcom
Broadcom (AVGO 1.48%) is another semiconductor firm well-positioned to capitalize on AI advancements. The company’s primary business involves networking components, including Ethernet switches and optical interconnects that facilitate substantial data transfer within AI clusters. As these clusters expand, networking demands escalate. Broadcom’s networking revenue recently spiked by 70%, highlighting its strong market position.
3. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (TSM 2.58%) has emerged as a leader in advanced chip production. Unlike competitors who design chips, TSMC benefits by manufacturing for virtually all significant players, including Nvidia, Broadcom, and Apple. Recently, Alphabet announced it will shift production of its Tensor G5 chip from Samsung to TSMC’s 3nm process, emphasizing TSMC’s technological supremacy.
With TSMC’s ability to scale and innovate rapidly, it plays a vital role in the semiconductor supply chain. Demand for AI chips is projected to grow by over 40% compounded annually through 2028. Given its essential function in this industry, TSMC represents a highly appealing long-term investment in AI infrastructure.
Geoffrey Seiler has investments in Alphabet. The Motley Fool holds positions in and endorses Advanced Micro Devices, Alphabet, Apple, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool also recommends Broadcom and has specific options positions on Intel. Please refer to The Motley Fool’s disclosure policy.
