Investing in artificial intelligence (AI) can be daunting as the market is flooded with companies leveraging this burgeoning trend to elevate their businesses. From AI deployment to software development, the opportunities are numerous. Apart from companies directly involved in AI operations, there are hardware components essential for AI that are poised to reap massive benefits regardless of individual company outcomes. Here are four companies set to emerge as significant winners in the AI landscape over the coming years.
ASML: Powering the AI Revolution
The backbone of every computer relied upon to formulate an AI model is a microchip. Here, the vital manufacturing component is supplied by ASML (NASDAQ: ASML), a producer of lithography machines responsible for creating conductive traces on chips. With semiconductors now boasting trace distances as minute as 3 nanometers (nm) – for comparison, a human hair is about 80,000 to 100,000 nanometers wide – chips have become more powerful and efficient. ASML’s technological monopoly in producing extreme ultraviolet (EUV) lithography machines positions it as an integral player in the AI hardware ecosystem.
Taiwan Semiconductor: Pushing the Envelope
As the world’s largest contract chip manufacturer, Taiwan Semiconductor (NYSE: TSM) is a pivotal user of ASML’s machines. With a stronghold in 3-nm chips and an ongoing development of 2-nm chips set for release in 2025, Taiwan Semiconductor’s penchant for innovation promises continuous revenue enhancements upon the launch of new products. Notable clients of Taiwan Semiconductor include Nvidia and AMD, both of which contribute vital components to the AI value chain.
Nvidia: The GPU Giant
Nvidia’s best-in-class GPUs are indispensable in the realm of AI. These graphics processing units are instrumental in handling vast quantities of data and training AI models, thereby making them an indispensable hardware asset. The soaring demand for Nvidia’s GPUs caused its revenue to surge in 2023, underscoring the unprecedented need for its products. The company’s dominance is poised to persist as long as AI remains a significant trend, necessitating a substantial computing infrastructure buildout.
Super Micro Computer: The Efficiency Enabler
Only procuring Nvidia GPUs embedded with chips manufactured by Taiwan Semiconductor through ASML’s lithography machines and connecting them is insufficient. A specialized server is requisite to maximize efficiency and attain peak performance from AI supercomputers. In this space, Super Micro Computer (NASDAQ: SMCI) excels, specializing in the design of highly configurable servers, be it for engineering simulations, drug discovery, or AI model training. As the demand for AI computers reaches the general market, Supermicro is poised to thrive, as evidenced by its stock surging approximately 140% since the outset of 2024.
A Diverse Portfolio of AI Champions
Investing in AI doesn’t necessitate singling out a solitary winner. One can opt for a diverse stock portfolio comprising critical AI suppliers, which are expected to thrive irrespective of which company produces the top AI product. These companies supply the essential building blocks for all AI models.