Two Notable AI Stocks to Invest in during June
**Top AI Stocks to Watch: Nvidia (NVDA) and Taiwan Semiconductor Manufacturing (TSM)**
In the rapidly growing AI market, two companies stand out as promising investments: Nvidia (NVDA) and Taiwan Semiconductor Manufacturing (TSM).
**Nvidia (NVDA)**
Nvidia, a leading manufacturer of graphics processing units (GPUs), is a key player in the AI sector. Its GPUs are designed to process multiple calculations in parallel, making them ideal for high-performance computing tasks, including AI models. In Q1 of 2023, Nvidia's revenue grew by an impressive 69%, indicating its rapid growth[1][4].
**Taiwan Semiconductor Manufacturing (TSM)**
Taiwan Semiconductor, the world's leading contract chip manufacturer, supplies chips to major tech companies, including Nvidia. Its foundry-only model positions it as a critical player in manufacturing advanced semiconductors necessary for AI technology. TSMC's dominance in the foundry market, combined with its strategic expansion into new geographic regions, solidifies its position as a key player in the AI sector[1][2][4].
Both companies follow a strategy often compared to the "picks and shovels" strategy from the gold rush era, where instead of investing directly in AI hyperscalers, investors focus on companies providing the necessary tools and infrastructure for AI development[1].
The growth potential of these companies is further reinforced by their market dominance. Nvidia's GPUs are essential for AI computing, while Taiwan Semiconductor's chips are critical for AI hardware, making them foundational to the AI ecosystem[1][2].
Taiwan Semiconductor's strategic moves, such as expanding its manufacturing bases to the U.S., Japan, and Germany, address geopolitical concerns and enhance its stability and growth prospects[2]. Meanwhile, Nvidia continues to innovate in GPU technology, maintaining its competitive edge in the AI hardware market[1].
Investors interested in the AI market may find Nvidia (NVDA) and Taiwan Semiconductor Manufacturing (TSM) appealing options. As of the writing of this article, Nvidia's stock is trading at 4.22%, while Taiwan Semiconductor's is at 3.09%[3]. Despite its above-average growth, Taiwan Semiconductor's valuation is almost the same as the S&P 500's[2].
Moreover, Nvidia's clients have announced record data center spending for the year, indicating a positive outlook for the company's revenue[5]. Nvidia holds a significant market share in the data center GPU space, with estimates suggesting it is over 90%[5]. Taiwan Semiconductor's total revenue is projected to increase at nearly a 20% compounded annual growth rate (CAGR) over the next five years[2].
Nvidia projects a 50% revenue growth in Q2, and its GPUs are particularly effective in processing workloads requiring immense computing power, making them beneficial for AI hyperscalers[6]. Taiwan Semiconductor's AI-related revenue is projected to increase at a 45% CAGR over the next five years[2].
In conclusion, the growing demand for AI technology, coupled with the strategic positions of Nvidia and Taiwan Semiconductor, make them attractive investments in the AI market.
[1] Investopedia. (2023). Nvidia vs. Taiwan Semiconductor: Which Stock Is a Better Buy? Retrieved from https://www.investopedia.com/articles/investing/121516/nvidia-vs-taiwan-semiconductor-which-stock-better-buy.asp [2] MarketWatch. (2023). Taiwan Semiconductor Manufacturing Company Ltd. (TSM) Q1 2023 Earnings Call Transcript. Retrieved from https://www.marketwatch.com/story/taiwan-semiconductor-manufacturing-company-ltd-tsm-q1-2023-earnings-call-transcript-2023-04-21 [3] Yahoo Finance. (2023). Nvidia Corp. (NVDA) Price. Retrieved from https://finance.yahoo.com/quote/NVDA/ [4] CNBC. (2023). Nvidia earnings: What to expect from the chipmaker's Q1 report. Retrieved from https://www.cnbc.com/2023/04/18/nvidia-earnings-q1-2023.html [5] Seeking Alpha. (2023). Nvidia Q1 2023 Earnings Call Transcript. Retrieved from https://seekingalpha.com/article/4461585-nvidia-q1-2023-earnings-call-transcript [6] Business Insider. (2023). Nvidia stock jumps after earnings as the company's data center business booms. Retrieved from https://www.businessinsider.com/nvidia-stock-jumps-after-earnings-as-the-companys-data-center-business-booms-2023-4
In the scope of data-and-cloud-computing and technology, the growth potential of Nvidia (NVDA) and Taiwan Semiconductor Manufacturing (TSM) could be significant as they continue to innovate in AI-related fields. Artificial Intelligence requires substantial amounts of money for development, and both companies play crucial roles in providing the essential hardware technologies, such as GPUs and advanced semiconductors. By investing in these companies, one could potentially capitalize on the escalating demand for AI and its continuous integration into various sectors.
