Artificial intelligence (AI) infrastructure spending is set to see a significant boost this year, benefiting semiconductor stocks with ties to AI chips. The big three cloud computing companies – Amazon, Microsoft, and Alphabet – budgeted $255 billion for growth capital expenditures related to AI infrastructure, while Meta Platforms announced plans to spend up to $65 billion.
A consortium of companies led by Japan’s Softbank and OpenAI is committing $500 billion to AI infrastructure in the US over the next few years through Project Stargate. This surge in spending will drive demand for AI chips, benefiting companies like Nvidia, Broadcom, Advanced Micro Devices (AMD), and Taiwan Semiconductor Manufacturing Company (TSM).
Nvidia is well-positioned to benefit from increased AI infrastructure spending, with its CUDA X platform offering GPU-accelerated microservices and libraries designed specifically for AI. The company has a 90% market share in the GPU space and is trading at a forward P/E ratio of 25 times 2025 analysts’ estimates.
Broadcom, meanwhile, has become the leader in helping customers design custom AI chips, with Alphabet, Meta Platforms, ByteDance, OpenAI, and Apple as its top customers. Broadcom’s stock is reasonably priced at a 30 times forward P/E ratio.
Advanced Micro Devices (AMD) is also poised to benefit from growing demand for AI infrastructure, particularly in the data center space where its CPUs are gaining market share. The company’s EPYC CPUs continue to gain traction among hyperscalers, and its CPUs have also been gaining share in the personal computer space.
Taiwan Semiconductor Manufacturing Company (TSM) is well-positioned to capitalize on the increased demand for chip manufacturing, with its strong pricing power and expanding manufacturing capacity. The company’s stock is cheap, trading at a forward P/E of 22 times.
Source: https://www.fool.com/investing/2025/02/23/4-no-brainer-ai-chip-stocks-to-buy-right-now