Two Noteworthy Artificial Intelligence (AI) Shares Worth Investing in by 2025
The world of AI investing is a treasure trove for businesses showing potential to outperform the market. Two such companies that have caught my eye are Nvidia (NVDA) and Taiwan Semiconductor Manufacturing (TSM).
Nvidia: The AI Powerhouse
Nvidia, a stock that has made plenty of investors wealthy, presents a promising opportunity. If you had invested $10,000 a decade ago in Nvidia, you'd now be sitting on around $2.7 million. While we can't travel back in time, Nvidia's future appears to be as bright as its past.
Nvidia specializes in creating graphics processing units (GPUs), regarded for their ability to perform numerous calculations at once, outperforming traditional CPUs in the process. This unique trait makes Nvidia's GPUs ideal for training AI models, as they can handle the intense calculations required by these models.
Analysts predict Nvidia's revenue will surge by about 51% in fiscal 2026. This growth is fueled by higher client spending and an upgrade to its newer-generation architecture, Blackwell. Blackwell GPUs deliver exceptional performance, far outpacing the previous-generation Hopper GPUs. This, along with the typical lifespan of GPUs (between 3 to 5 years), suggests a potential replacement cycle may be on the horizon.
Moreover, Nvidia's stock isn't as pricey as it once was. The stock currently trades for 54 times its trailing earnings, making it a less expensive option compared to other big tech stocks like Amazon (48 times earnings), Apple (42 times earnings), and Microsoft (36 times earnings), despite Nvidia's faster growth rate.
In summary, Nvidia remains an excellent AI investment opportunity, poised to provide market-beating returns over the next five years.
Taiwan Semiconductor Manufacturing: Microchips Matter
Taiwan Semiconductor Manufacturing (TSM) is a leader in microchip production, integrating its chips into Nvidia GPUs along with many other customers. AI-related microchips have contributed significantly to TSM's success.
In 2023, TSM's management projected that AI-related hardware would grow at a 50% compound annual rate until it made up a low-teens percentage of revenue by 2027. However, TSM's AI revenue far surpassed this projection, growing exponentially and currently representing a mid-teens percentage of TSM's overall revenue.
TSMC anticipates no slowdown in AI revenue growth, similar to Nvidia. Wall Street analysts estimate a 25% revenue increase for 2025, with its next-generation 2 nanometer chip slated to enter mass production in 2026. This new chip technology can decrease energy consumption by 25% to 30%, making it an attractive option for companies looking to cut down on data center electricity bills.
With a relatively cheap stock compared to other big tech, TSMC's growth rate surpasses that of its competitors. A bullish case for TSMC's stock and its potential to deliver market-beating returns over the next five years can be made based on these factors.
In conclusion, both Nvidia and Taiwan Semiconductor Manufacturing present compelling AI investing prospects, with promising growth prospects and market-beating potential over the next five years.
Nvidia's exceptional performance in AI investing has been evident, with its revenue expected to surge by about 51% in fiscal 2026. This growth is partially attributed to the company's investment in its newest-generation architecture, Blackwell, which outperforms its previous-generation Hopper GPUs. (finance, investing, nvidia, outperform)
Due to its strong performance in AI-related microchips, Taiwan Semiconductor Manufacturing (TSM) has seen its AI revenue exceed its projected growth rate, currently representing a mid-teens percentage of TSM's overall revenue. Analysts estimate a 25% revenue increase for TSM in 2025, driven by its next-generation 2 nanometer chip slated for mass production in 2026. (investing, tsm, money, ai)
Investors looking for potential market-beating returns should consider Nvidia's stock, which currently trades for less than other big tech stocks like Amazon, Apple, and Microsoft. Despite its faster growth rate, Nvidia's stock is priced more affordably. (nvidia, investing, market, stocks)
AI investing is a lucrative opportunity, and two companies showing great potential are Nvidia and TSM. Both companies have demonstrated outstanding performance in the AI sector and have the potential to continue outperforming the market in the coming years. (ai investing, nvidia, tsm, outperform)
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