With the market having rallied back from lows hit in April 2025, artificial intelligence (AI) stocks once again look ready to lead the charge higher. AI has the potential to be a once-in-a-generation technological shift, and as such, AI stocks should be long-term winners.
Let's examine three AI stocks poised for the next bull run.
Image source: Getty Images.
1. Nvidia
It's hard to talk about top AI stocks and not start with Nvidia (NVDA +1.31%). The company's graphics processing units (GPUs) have become the backbone of AI infrastructure due to their strong processing power, making them ideal for handling AI workloads.
The company's wide moat, however, comes from its CUDA software platform. CUDA was created to allow developers to easily program Nvidia GPUs, and in the years since, it has built a collection of AI libraries and tools on top of CUDA that enhance the performance of its chips when running AI workloads. This has led it to take an over 80% market share in the GPU space.
NASDAQ: NVDA
Key Data Points
Given its dominant position in the GPU space, Nvidia's biggest opportunity and risk both lie with AI infrastructure spending. At this time, however, AI spending still looks to be in the early stages of a long upward move. Cloud computing companies are pouring money into data centers to keep up with burgeoning demand, while companies developing foundational large language models (LLMs) also continue to invest heavily in AI infrastructure to build ever-better AI models. Enterprise and sovereign AI spending have also been picking up.
With a forward P/E of 32 times based on fiscal 2025 analyst estimates and a 0.7 price/earnings-to-growth (PEG) ratio, the stock remains attractively valued. Stocks with PEGs below 1 are generally considered undervalued.
2. Taiwan Semiconductor Manufacturing
Another big winner of the AI infrastructure buildout is Taiwan Semiconductor Manufacturing (TSM 1.04%), or TSMC for short. The company is the leading semiconductor contract manufacturer in the world and has become an integral part of the semiconductor value chain.
Manufacturing advanced chips like GPUs is an incredibly complex process, and TSMC is one of the few companies in the world capable of doing it at scale. It takes deep technological expertise to shrink process nodes (increasing transistor density on a chip to help improve chip performance and power efficiency) while maintaining high manufacturing yields. As rival foundries like Intel and Samsung have struggled with delays and yield issues, TSMC has become an essential partner for top chip designers like Nvidia. This, in turn, has given the company strong pricing power.
NYSE: TSM
Key Data Points
Like Nvidia, TSMC's biggest opportunity, and its biggest risk, lies in AI infrastructure spending. A slowdown in that spending could hit the company with a one-two punch of declining revenue and lower fab utilization, which would pressure margins. That said, TSMC is working closely with its largest customers to build out capacity in anticipation of future demand. Right now, advanced-node capacity remains tight, and with AI workloads continuing to increase, TSMC appears to have a strong growth runway ahead.
Trading at a forward P/E of 21 times and a 0.6 price/earnings-to-growth (PEG) ratio, TSMC's stock looks like a bargain.
3. Palantir Technologies
While Nvidia and TSMC benefit from the AI infrastructure buildout, Palantir Technologies (PLTR +4.75%) is one of the prime companies harnessing the power of AI to help its customers apply the technology to solve real-world problems. Instead of focusing on chips or AI models, Palantir is building out the workflow and application layers of AI. Its Artificial Intelligence Platform (AIP) brings together data from different sources, organizes it into what the company calls an "ontology," and connects that data to real-world processes. It's also recently introduced AI agents that can automatically perform tasks with little to no human supervision.
NASDAQ: PLTR
Key Data Points
The beauty of Palantir's AI platform is that it can be used for a wide array of tasks across very different industries. For example, hospital operator Tampa General is using AIP to help monitor for sepsis, while global insurance giant AIG is using AIP to help automate its underwriting workflow. The range of problems Palantir's technology can tackle is incredibly broad, making the opportunity in front of it massive.
The company also benefits from its largest customer, the U.S. government, beginning to embrace AI solutions. While there is some risk that government budget cuts, especially at the Department of Defense, could negatively impact its growth, Palantir's ability to create efficiencies and reduce costs should make it a government winner.
Palantir's AI momentum can be seen in its accelerating revenue growth, which has increased each of the past seven quarters. Last quarter, it grew its revenue 39% to $883.9 million. While the stock is not cheap, the company has some of the best long-term growth opportunities of any AI stock out there.
