Global trade tensions are reshaping the world we live in. According to the World Trade Organization (WTO), since 2009, import restrictions have negatively impacted nearly 11.8% of global imports, while export restrictions have affected 3.2% of global exports as of mid-October 2024. The WTO now expects world merchandise trade growth to slow to 2.4% in 2025 and to just 0.5% in 2026, down sharply from its 2.8% growth in 2024.
While these numbers highlight the escalating tensions in global trade, those conditions are also driving many countries to invest in regional manufacturing capacity. Hence, although the technology sector has come under strain due to the geopolitical headwinds, it is also seeing some new growth opportunities because of them.
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According to Nvidia CEO Jensen Huang, demand for artificial intelligence-grade computing power has escalated dramatically in the past six months. The ramp up in the global AI infrastructure buildout is all too obvious, considering the investment trends seen around the world. The European Union has pledged $1.1 billion (1 billion euros) to promote AI initiatives across industries. The U.S. government is also investing heavily in building advanced chip manufacturing capacity by giving companies grants through the CHIPS Act.
These policy moves could prove highly beneficial for AI infrastructure companies specializing in high-performance computing, networking, and power management. Other AI-driven software players also stand to benefit from the expanding AI ecosystem.
Here are two potential AI winners that could capitalize on these geopolitically driven tailwinds.
Taiwan Semiconductor Manufacturing
Demand for advanced chip manufacturing has been rising sharply, and trade tensions between the U.S. and China have affected global supply chains. As the world's largest third-party chip foundry, Taiwan Semiconductor Manufacturing (TSM 8.01%), also called TSMC, is well positioned to benefit from these trends. While most of its production capacity is concentrated in Taiwan, just 100 miles from mainland China, it is investing in expanding its global manufacturing footprint in a bid to make its supply chains more resilient and reduce its risks.
TSMC is investing almost $165 billion in the U.S. to expand its advanced manufacturing capacity here and meet the soaring demand for chips that can handle AI and high-performance computing workloads. The company is building six advanced wafer fabs (fabrication plants), two advanced packaging facilities, and a research and development (R&D) center in Arizona. In late 2024, the company commenced volume production at its first specialty technology fab in Kumamoto, Japan. Finally, TSMC is working to begin building a specialty technology fab in Germany.
This geographic expansion positions TSMC to remain a neutral and trusted foundry partner to countries focusing on localizing their semiconductor supply chains. Its overseas fabs are expected to cut its gross margins by 2% to 3% annually in the early stages and by 3% to 4% in the latter stages from 2025 to 2030. Despite these headwinds, the company expects to maintain gross margins of 53% or higher in the long term. This is an achievable target since its higher-margin advanced process nodes (7-nanometer and below) already contribute nearly 74% of wafer revenue.
TSMC is focused on introducing even more advanced process nodes, such as the 2-nanometer (N2) node and A16 node. N2 is on track for volume production in the second half of 2025, while revenue contribution is estimated to start in the first half of 2026. Volume production of its even more advanced A16 chips, which have demonstrated significant improvements in power efficiency over prior chip generations, is expected to begin in the second half of 2026. Chips fabricated using the A16 process node will be particularly well suited for power-intensive high-performance computing applications in data centers.
TSMC trades now at about 26.2 times forward earnings, which is quite a reasonable valuation for a company with a solid technological edge in the advanced semiconductor manufacturing market. Hence, given the explosive demand for the cutting-edge chips it manufactures, there is significant room for its share price to grow in the coming years.
Snowflake
Data warehousing and analytics provider Snowflake (SNOW 2.11%) is well positioned to benefit from the increasing adoption of data localization laws amid rising global tensions. As governments across the world start exercising greater control over cross-border data flows, companies increasingly need AI platforms that comply with evolving regulations.
Snowflake's AI Data Cloud has been designed to be secure, multicloud, and compliance-driven. It operates more than 40 cloud regions across major hyperscalers such as Amazon's AWS, Alphabet's Google Cloud, and Microsoft's Azure, and its platform is well positioned to capitalize on opportunities in regulated sovereign markets. These markets often require specific customer and usage data to stay within geographical boundaries or in dedicated environments. Additionally, many U.S. technology firms are moving workloads away from Chinese data centers. Since Snowflake's data platform is cloud-agnostic, it can offer these companies a low-friction way to relocate data and AI workloads.
Snowflake's business is already growing at an impressive pace. In its fiscal 2026 second quarter (which ended July 31), its product revenue grew by 32% year over year to $1.09 billion. The company had remaining performance obligations (a measure of contracted revenues for services not yet provided) of $6.9 billion, up 33% on a year-over-year basis. This highlights the company's exceptional revenue visibility.
AI adoption is proving to be a significant growth catalyst. According to CEO Sridhar Ramaswamy, Snowflake's AI capabilities have driven almost half of all new customer wins in Q2. Currently, more than 6,100 active accounts use the company's AI capabilities weekly. Its net revenue retention of 125% shows that its established customers are increasingly spending more on Snowflake's services as time passes. Hence, Snowflake's unified data and AI platform seems well poised to benefit from this tailwind in the coming years.
The intersection of the AI and compliance spaces is providing a unique edge to Snowflake. However, the stock trades at more than 20.5 times sales, which seems like an expensive valuation for an unprofitable company. But Wall Street seems to be valuing it based on its growth potential. While that premium leaves it with limited margin for error in terms of execution challenges, Snowflake's robust AI capabilities, multicloud data strategy, and strong customer acquisition momentum make it an attractive pick even at this elevated valuation level.
