This article first appeared on our US website.
If you want to put $5,000 into artificial intelligence (AI) next year, choose stocks with strong growth and solid visibility. We will look at two stocks that fit this bill.
1. Broadcom
Broadcom (NASDAQ:AVGO) has become a force in the world of AI. The company has long been a strong player in data center network components needed to move data within and between data centers.
However, the biggest opportunities lie in ASICs (application-specific integrated circuits), which are custom chips that are pre-programmed to perform specific tasks. As companies look to get the most out of their AI infrastructure spending and reduce costs, they are increasingly turning to Broadcom to help design custom AI chips as an alternative to graphics processing units (GPUs).
Alphabet was one of the first companies to work with Broadcom, and now its tensor processing units (TPUs) power much of Google Cloud’s AI workloads. It was added later Metaplatforms and ByteDance as customers, and has forecast that these three customers could represent a $60 billion to $90 billion revenue opportunity in fiscal 2027 alone.
Broadcom also recently announced a partnership with OpenAI to develop and deploy 10 gigawatts of custom AI chips and networking components by the end of 2029. To put that into context, a single gigawatt of data center power typically translates into about $35 billion in chip spending. As such, this could turn into a $100 billion annual market opportunity for Broadcom within a few years.
Meanwhile, Broadcom also said that a $10 billion AI chip order from an unnamed fourth customer did not come from OpenAI. The company has reportedly collaborated with Apple, and this could be an indication that the iPhone maker is much further along with its custom AI chip design than expected.
With multiple customers using Broadcom to develop custom AI chips, the company is well positioned to see very strong growth in the coming years. That’s why it’s one of the best AI stocks to invest in right now.
2. Semiconductor manufacturing in Taiwan
Taiwanese semiconductor manufacturing (NYSE: TSM) has become one of the most important companies in the AI ​​industry, thanks to chip designers like Broadcom and Nvidia rely on it to make their most advanced chips. Producing chips with the smallest possible node size and high yields is extremely difficult, but this is where TSMC excels.
Nearly three-quarters of TSMC’s revenue now comes from chips made on nodes of 7 nanometers or smaller, and 3-nanometer technology has already made a meaningful contribution. The company plans to start production of 2 nanometers next year and is already looking at switching to 1.6 nanometers.
TSMC’s ability to continue to reduce node size while achieving high yields at scale has made it more than just a semiconductor contract manufacturer; it has become an essential partner for leading chipmakers.
Demand for AI chips continues to drive growth for TSMC, with the company reporting a 41% increase in sales when it recently reported its third quarter results. Meanwhile, the company expects demand for AI chips to grow at a compound annual growth rate (CAGR) of 40% on average in the coming years. Given that leading chip makers need to work with TSMC to secure future capacity, it should have strong visibility into future growth.
Overall, TSMC remains one of the major players in the global semiconductor supply chain. Regardless of which chip designer takes market share in the AI ​​semiconductor space, they will all need TSMC’s factories to make their chips. That’s why it’s one of the best AI stocks to own next year and beyond.
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