3 Top Stocks to Buy for AI Exposure

Chip stocks have been in for quite a rough ride in recent weeks as a number of headwinds have hit the sector hard. From new trade restrictions on foreign companies to regulatory investigations and weak macroeconomic data, investors have had a lot to consider when it comes to the growth trajectories and growth prospects of these companies.

Of course, the semiconductor sector is an increasingly important one, given the role of technology in our daily lives. Companies that can produce the most efficient and high-performance chips clearly win today. On this list are three of the best chip stocks that long-term investors want to consider just this facet of their business.

That said, these companies are also strong buys for a number of reasons that have little to do with their underlying AI exposure. Here’s why these three stocks are on my list as top ways to play this particular high-growth space right now.

Key points about this article:

• The search for top chip stocks to buy to capture the edge of technological progress is on, with these three top chip stocks among the best AI plays on the market.
• That said, there are a number of other reasons why investors may want to consider these gems at current levels.
• If you’re looking for action with huge potential, be sure to grab a free copy of ours brand new “Next NVIDIA” report.. It has a software stock where we are sure it has 10x potential.

Nvidia (NVDA)

Image of an Nvidia chip

Nvidia (NASDAQ:NVDA) continues to dominate the AI ​​conversation in the chip world, holding an incredible 98% share of the data center GPU market as of last year. A pioneer in developing the highest performance chips out there, with the latest Blackwell chip set to reshape the market in more ways than one, there’s a lot to like about Nvidia’s strengths in terms of its AI potential.

But with recent Blackwell chip delays and disappointing guidance for this particular segment, investors have been looking to start selling Nvidia stock. And that was before the Justice Department began looking into the company over past agreed-upon AI purchases, concerned about the company’s potential to monopolize what could be a very lucrative space in the long term.

We will have to see how these issues are resolved in the coming quarters. But there are good reasons to see why Nvidia stock is holding up relatively well in the face of these concerns.

The company’s core data center revenue soared 427% year-over-year to $22.6 billion in the first quarter, thanks to its investments in artificial intelligence. As long as Nvidia continues to put its money where the growth is, investors will continue to reward this stock over time.

Advanced Micro Devices (AMD)

AMD office building

Advanced microdevices (NASDAQ:AMD) shares are down 24% in the past month, trailing Nvidia’s 112% gain. After struggling with its AI and gaming businesses and reporting weaker-than-expected sales, the stock has shown some signs of recovery. In the company’s second quarter, data center revenue grew 115% (not Nvidia-level growth, but that’s still pretty impressive), while also seeing a 49% increase in processor sales. A diversified player making some forays into the AI ​​chip market, AMD could be seen as a potential beneficiary of this trend, but many investors still value the company for its core business, which has performed well.

The point is, it hasn’t worked well enough to push stocks higher since the start of the year, with stocks giving up all of their AI-driven gains earlier this year and then some. We’ll have to see how the incoming data plays out over the next few quarters. I, for one, remain optimistic that the company can make the necessary investments while increasing growth in its core lines of business. This is partly due to the fact that mmajor server manufacturers such as Dell and Super Micro are incorporating the AMD Instinct platform. With higher-margin data center revenue driving profit growth, AMD also acquired Europe’s largest private AI lab, AI siloto improve its generative AI capabilities.

Nvidia’s Blackwell platform flaw delays new chips by three months, potentially opening the door for AMD to gain market share. That setback, amid a GPU shortage, could hurt Nvidia’s stock and finances, while AMD’s $220 billion market cap could post significant gains if it beats forecasts and capitalizes on data center growth.

Taiwan Semiconductor (TSM)

A TSMC facility

Taiwan Semiconductor (NASDAQ:TSM) controls more than 60% of global semiconductor production and 90% of advanced chip production, including 3 nanometer and high-tech packaging. Its dominance has been driven by key partnerships with firms such as Apple, Nvidia and even Intel, which could expand the company’s reach into a more brand-focused business model. This is one that I’ve long believed the company might pursue, and it’s one that could obviously be a net negative for other major token players.

But as a global foundry giant, Taiwan Semi maintains strong growth, driven by the kind of secular tailwind that many investors want to play. Indeed, from a trading perspective, this is a stock that I believe best represents the health and outlook of the overall chip space, as close to an ETF as investors can get. Consequently, for those optimistic about the sector’s long-term health, TSMC’s move into the European and US markets could position the company to become an even bigger global power in the space, and one that continues to gain even more market share in time. .

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