Although artificial intelligence (AI) investing gets a ton of attention from the market, there's a good reason for that. It's where the majority of cash flows are being poured into, and following the money to where it's being spent is a genius investing strategy.
Right now, most of the AI hyperscalers are still building their computing capacity, making companies that sell this equipment into great investments. I believe stocks like Nvidia (NVDA 2.02%), Taiwan Semiconductor (TSM 0.61%), and Broadcom (AVGO -0.77%) are among the best buys now, as they receive a boatload of this spending.
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1. Nvidia
Nvidia has topped the list of best AI companies to invest in since the trend began in early 2023. Its graphics processing units (GPUs) are the computing muscle behind most of the AI technology people experience today, and show no signs of slowing down. Nvidia's management projects that the AI hyperscalers will spend $600 billion on capital expenditures for AI data centers this year, but that figure could reach $3 trillion to $4 trillion globally by 2030. Nvidia captures a sizable chunk of that spending, as Wall Street analysts expect Nvidia to generate around $206 billion in revenue this year.
Time will tell if Nvidia can capture a large chunk of that projected spending, and a lot of it will hinge on whether its products are accepted back in China once the U.S. government grants Nvidia's export license. However, I think that Nvidia still has the world's best technology for general-purpose computing, making its products a no-brainer choice when building artificial intelligence computing capacity.
Nvidia remains a top stock pick in the AI realm, even if it has been a massive success over the past few years.
2. Taiwan Semiconductor
Nvidia is what's known as a fabless chip company. It designs the products, but relies on other companies to manufacture the components that go into them. One of the most important companies in this setup is the chip foundry, which produces the microchips in the devices. Nvidia uses Taiwan Semiconductor for this work, and TSMC has made a name for itself in the industry by providing best-in-class technology and production yields.
Nearly all leading tech companies use TSMC's chips. Often, two competitors both use chips produced by TSMC, such as Nvidia and AMD (AMD 1.46%). Because Taiwan Semiconductor is acting as a neutral party fabrication facility, this arrangement works great and allows it to capitalize on massive technology trends.
An investment in Taiwan Semiconductor is a bet that companies are going to use more advanced chips, and a greater quantity of them, in the future. I think that's a very safe assumption, making TSMC a great stock to buy now.
3. Broadcom
Broadcom is challenging Nvidia's dominance in the AI computing market by partnering with AI hyperscalers to design custom AI accelerator chips.
Nvidia GPUs are the undisputed leader of multi-purpose computing, and can handle many types of workloads, whether it's AI training, cryptocurrency mining, or engineering simulations. However, if a client only uses an Nvidia GPU for one workload, these capabilities are wasted. By designing an AI chip with one workload in mind, Broadcom can achieve greater performance at a cheaper price.
This makes Broadcom's custom AI accelerators a potentially massive business, and it's starting to show up in the company's results. In third-quarter fiscal year 2025 (ended Aug. 3), Broadcom's AI revenue soared 63% year over year, outpacing Nvidia's 56% growth rate.
This shows that Broadcom is gaining market share in this area, and it could be a force to reckon with over the next five years. I think Broadcom will be a great investment over the next few years as a result, and investors should consider scooping up shares alongside Nvidia and Taiwan Semiconductor.
