We recently compiled a list of AI news that investors should miss. In this article, we’ll take a look at how Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) stands compared to other AI stocks.
Enterprises are investing heavily in AI infrastructure to meet the growing demand for machine learning, data processing, and AI-driven applications. This spending is primarily focused on building data centers, acquiring specialized hardware, and optimizing cloud infrastructure. According to a McKinsey report, global spending on AI infrastructure could reach up to $500 billion by 2027, highlighting the critical role AI will play in future AI development. The majority of this investment is focused on AI-specific hardware, such as graphics processing units (GPUs) and application-specific integrated circuits (ASICs), which are critical to training and deploying AI models. NVIDIA, a leading AI chip company, is seeing a surge in demand for its GPUs, primarily due to their centrality in deep learning tasks. CEO Jensen Huang said the AI boom is being fueled by massive infrastructure demand, and the market is just at the beginning of this growth curve.
To learn more about these trends, visit 33 Most Important AI Companies to Watch and 20 Industrial Stocks Already Riding the AI Wave.
Data centers are another focus of AI infrastructure spending. AI workloads are demanding and require specialized facilities that can support high-density computing environments. Blackstone’s $16 billion acquisition of AirTrunk, a leader in AI-driven data centers, highlights the growing importance of this infrastructure. The deal is expected to add 800 MW of data center capacity, exceeding 1 GW. This proves the growing demand for infrastructure that supports AI-driven applications. Cloud infrastructure is also a major area where companies are devoting resources. Cloud giants are increasing investments in AI infrastructure. These companies are developing new AI-optimized cloud services to accommodate enterprises adopting AI. Gartner predicts that spending on cloud AI infrastructure will exceed $200 billion by 2026, as enterprises increasingly move from on-premises AI deployments to scalable cloud-based solutions.
Google Cloud CEO Thomas Kurian recently said that AI is creating entirely new revenue streams for businesses, and cloud infrastructure is the backbone that will enable this transformation. In addition to hardware, organizations are also investing in data management platforms and storage solutions to handle the large amounts of data that AI systems require. In fact, some estimates suggest that the global AI data infrastructure market will grow at a compound annual growth rate of 18% due to increasing data volumes and the need for real-time data processing capabilities. Enterprises are significantly ramping up their investments in AI infrastructure, with a focus on hardware, data centers, and cloud computing. With AI workloads expected to continue to grow, this spending will only increase in the coming years.
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To learn more about these developments, visit BlackRock’s 30 Most Important AI Stocks and Beyond the Tech Giants: 35 Non-Technology AI Opportunities.
our methodology
In this article, we selected AI stocks by examining news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Close-up of a complex network of integrated circuits used in logic semiconductors.
Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM)
Number of hedge fund holders: 156
Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) manufactures and sells integrated circuits and semiconductors. According to the latest reports, social media giant TikTok’s parent company ByteDance has signed a contract with Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) to mass produce two AI chips.
The chips are jointly designed by the two companies and could go into production within the next two years. Production of the chips is aimed at reducing Chinese internet technology companies’ dependence on US chipmaker NVIDIA. The latter is currently providing chips to ByteDance for the development and operation of AI models. However, the US has banned exports of NVIDIA chips to China in recent months.
TSM ranks 7th overall on our list of AI stocks that investors can’t afford to miss. While we acknowledge TSM’s potential as an investment, we believe that some AI stocks are more likely to deliver higher returns and do so in a shorter time frame. If you’re looking for AI stocks with more promise than TSM, but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: $30 trillion opportunity: 15 humanoid robot stocks to buy, according to Morgan Stanley and Jim Cramer, says NVIDIA has ‘become a wasteland.’
Disclosure: None. This article was originally published on Insider Monkey.
