The AI market will grow to a stunning $4.8 trillion by 2033, according to the United Nations Conference on Trade and Development. The companies that can help their customers harness the full power of this game-changing technology stand to create fortunes for their shareholders.
To advance your hunt for these wealth builders, read on to learn more about two of the best AI stocks available in the stock market today.
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1. Taiwan Semiconductor Manufacturing
Chip designers get a lot of attention from investors. Nvidia alone has seen its market value soar to a staggering $4 trillion. But someone must build the cutting-edge chips that Nvidia and other leading tech companies design. That's the domain of Taiwan Semiconductor Manufacturing (TSM -1.86%), the dominant provider of chip foundry services.
The company known as TSMC commands a nearly 70% share of the global semiconductor manufacturing industry, according to TrendForce. The chipmaker supplies many of the largest and fastest-growing technology markets. Data centers, smartphones, robotics, and autonomous vehicles are just some of the industries TSMC serves. Major clients include Apple, Alphabet, and Advanced Micro Devices. In all, TSMC built 11,878 distinct products for 522 different customers last year.
Partnering with these tech trailblazers has enabled TSMC to grow its revenue and profits by 18% annually since its initial public offering (IPO) in 1994. Management is committed to passing a significant portion of this cash on to shareholders. TSMC has not reduced its cash payout since initiating its dividend in 2004. Its stock currently offers a well-supported and steadily growing 1.2% yield.
This impressive financial performance is likely to continue. TSMC's earnings surged by over 60% to $2.47 per American depositary receipt (ADR) in the second quarter, fueled by booming sales of AI chips.
2. Amazon
Many of the most powerful AI applications are delivered via the cloud. As the operator of the largest cloud computing platform, Amazon (AMZN -2.91%) is well placed to deliver AI-fueled profits to its shareholders.
Annual cloud platform and infrastructure revenue will approach $1.2 trillion by 2030, according to Goldman Sachs. Despite the rapid growth of Microsoft's Azure and Google Cloud, Amazon Web Services (AWS) remains the clear leader in this rapidly expanding market.
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AWS is already a $100 billion business with operating margins north of 30%. It's also growing at a solid clip, with sales up 17% in the second quarter. Amazon's recent deal with OpenAI, which will make the machine learning pioneer's AI models available to AWS customers for the first time, should fuel further growth.
Advances in AI should also help to drive Amazon's profit margins higher in its massive e-commerce operations. The online retail colossus is investing aggressively in automation technology. Amazon deployed its one millionth robot in June. The company is projected to soon have more machines than people working in its giant fulfillment centers. As improvements in AI make robots more capable, Amazon's labor costs should decline over time.
With both its cloud computing and online retail businesses set to grow more profitable in the coming years, Amazon's stock is a smart investment today.
