Artificial intelligence (AI) is rewriting the playbook for nearly every major tech company. Because the AI development game is still in its early innings, there remain plenty of opportunities to rack up points. And it's a perfect time to jump into some of the leaders in the space.
Here are five names that are already shaping the future of AI that investors might want to consider buying for the long haul.
Image source: Getty Images.
1. Nvidia
Nvidia (NVDA -0.83%) is still the clear leader in AI hardware. Its graphics processing units (GPUs) run the majority of the world's AI workloads, and its market share for GPUs in Q1 was a staggering 92%.
Its chips are only part of the story, though. Years before AI went mainstream, Nvidia seeded its CUDA software into research labs and universities for free. That early push trained a generation of developers on its platform and encouraged the creation of tools and libraries that make its chips perform even better.
The result is an ecosystem that's hard to dislodge. Competitors can match the performance of its chips on paper, but they're still years behind on the software side. Nvidia's move to release new chips every year should also keep it in the lead. Overall, AI infrastructure should continue to be a huge growth driver for the company moving forward.
2. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (TSM -1.17%) is the unsung hero of the AI boom. It doesn't design chips, but it builds the most advanced ones for nearly every major player, including Nvidia. That means it wins no matter who comes out on top. High-performance computing now accounts for 60% of its revenue, up from 52% a year ago, and demand keeps climbing.
The company's lead in advanced manufacturing is unmatched. Last quarter, chips built on 7-nanometer and smaller nodes made up nearly three-quarters of revenue, with 3nm already representing almost a quarter. Meanwhile, competitors continue to struggle, with both Intel and Samsung reportedly having major production yield issues at smaller nodes.
As AI adoption spreads into new markets like robotics and autonomous vehicles, TSMC's vital role at the heart of the semiconductor supply chain makes it a long-term winner.
3. Alphabet
Once viewed as a potential AI loser, Alphabet (GOOGL -0.67%) (GOOG -0.54%) has turned AI into a tailwind for its core business. Google Search traffic is growing, helped by AI Overviews that are now used by billions of people each month. Search revenue rose 12% last quarter, showing the strategy is paying off. The Gemini app and its new AI Mode are just starting to ramp up, opening more growth opportunities.
Alphabet's cloud computing business, Google Cloud, is another bright spot. Revenue jumped 32% last quarter, and operating income more than doubled as more customers use Google's Vertex platform to build and deploy AI models and apps. Capacity remains tight, which is why Alphabet plans to pour billions into expanding its data center infrastructure. Not to be overlooked, the company's custom AI chips give it a cost advantage and are gaining momentum with customers.
Alphabet is beginning to change the narrative on AI, and it looks like it will be a long-term AI winner.
4. Meta Platforms
Meta Platforms (META -1.21%) is using AI to strengthen its already dominant social media platforms. Its Llama models are keeping users on Facebook and Instagram longer by improving content recommendations. That extra engagement creates more ad opportunities, and new AI-powered tools are helping advertisers target consumers more effectively. As a result, advertisers are getting better returns, which is leading to higher prices.
Meanwhile, WhatsApp and Threads could be the company's next growth engines. WhatsApp has over 3 billion users, and Threads is already at 350 million, yet both are only beginning to run ads. AI, meanwhile, should help speed up monetization.
However, the company has even bigger goals in mind when it comes to AI. CEO Mark Zuckerberg has been clear about his goal of building "personal superintelligence," and he's spending heavily to hire the people who can make it happen. That makes Meta an AI stock that investors should own over the long haul.
5. Microsoft
Microsoft's (MSFT -1.61%) businesses keep delivering, with AI helping drive its growth. Its cloud computing unit, Azure, has posted revenue growth of 30% or more for eight straight quarters, with AI responsible for nearly half of that increase. Its partnership with OpenAI gave it an early lead, as customers like having direct access to powerful AI models through Azure.
AI is now embedded across Microsoft's product lines. Enterprise customers continue to embrace Microsoft 365 AI Copilot assistants, while its GitHub Copilot is seeing rapid adoption among developers. The company is investing heavily in GPUs and servers to relieve capacity bottlenecks, and it's exploring quantum computing as another potential technology breakthrough.
Let's also not forget that the company has a large stake in OpenAI that entitles it to 49% of OpenAI Global's profits up to a tenfold return on its investment. With its enterprise relationships, cloud strength, early AI push, and stake in OpenAI, Microsoft is set to benefit as AI adoption accelerates worldwide.
