Artificial intelligence (AI) investing doesn’t have to be hard. Plenty of stocks look like attractive investments, and they’re often right in front of investors. Successful AI investing doesn’t mean finding the next Palantir (NASDAQ: PLTR) or Nvidia (NASDAQ: NVDA); sometimes, it’s just picking the proven winners and letting them deliver.
That’s why I think this trio is an excellent investment, as all three have a proven track record of delivering excellent results for investors. Three stocks that I think investors should load up on are Nvidia, Taiwan Semiconductor Manufacturing (NYSE: TSM), and Broadcom (NASDAQ: AVGO). There’s a common theme that unites these three stocks and makes them excellent buys right now.
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This trio is facilitating the buildout of AI infrastructure
Nvidia’s graphics processing units (GPUs) have built the AI products that we know and interact with today, and with its leadership position, that won’t change anytime soon. Nvidia is continually innovating and developing the best GPUs possible, which has kept it at the top of the AI arms race over the past few years.
However, Nvidia wouldn’t be able to keep innovating without Taiwan Semiconductor’s production capabilities. Nvidia can’t make chips, so it farms that work out to Taiwan Semiconductor, the world’s leading contract chip manufacturer. Taiwan Semiconductor’s facilities allow it to produce the most advanced chips in the world at an impressive yield, which is why nearly every competitor in the AI arms race uses its chips.
Another company that uses chips from TSMC is Broadcom, which is involved in the AI arms race in two ways. The first way is its connectivity switches. These devices allow GPUs to operate independently from each other, and the information from each device is stitched together to form an answer to a workload that was split across multiple GPUs. Additionally, Broadcom partners with AI hyperscalers to develop their own custom AI accelerators, which it calls XPUs. XPUs can outperform GPUs in specific scenarios Broadcom and the end user have designed them for. While this technology isn’t going to replace GPUs, it complements them in a well-rounded AI infrastructure buildout.
While this trio has experienced impressive growth over the past few years, they still have a lot ahead of them, making them excellent investment options right now.
All three are projecting massive growth over the next few years
Nvidia’s growth has stayed rapid over a time frame most investors would have never thought possible two years ago. If third-party projections come true, it could extend even further. During its 2025 GTC event, Nvidia cited a third-party research company’s projection that data center capital expenditures will rise from $400 billion in 2024 to $1 trillion by 2028. That’s huge growth, and considering that Nvidia gets a nice chunk of that pie if the buildouts expand to $1 trillion by 2028, Nvidia would be an excellent stock to buy now.
Taiwan Semiconductor’s management is very bullish on its growth prospects, thanks to AI. Over the next two years, it sees a compound annual growth rate (CAGR) of 45% for AI-related revenue. This will help push its overall growth rate to nearly a 20% CAGR, which is incredible growth considering TSMC’s size and dominance already.
Broadcom may have the most bullish outlook, as it’s slated to see huge growth as AI inference begins to take over. Inference occurs when an AI model is pinged for an answer, and Broadcom’s connectivity switches and XPU are perfectly suited for these tasks. As a result, it expects to see massive growth over the next few years. In fiscal year 2024, which ended Nov. 3, 2024, Broadcom’s AI-related revenue from semiconductors (including switches and XPUs) was $12.2 billion. However, that could reach anywhere from $60 billion to $90 billion by fiscal year 2027, resulting in massive growth for Broadcom’s stock.
AVGO Revenue (TTM) data by YCharts
Although all three stocks have been successful investments over the past few years, they are also excellent stock picks for the future. As a result, I think investors should take the opportunity to increase their position size or add these stocks to their portfolio.
If AI-related spending continues to grow, these three will be its primary beneficiaries. There are clear signs of increasing AI spending, making this group a no-brainer buy.
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Keithen Drury has positions in Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Nvidia, Palantir Technologies, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
