Artificial intelligence (AI) could create substantial gains for investors in the next decade. The best thing about this opportunity is that you don't need to chase high-risk stocks to do well. The AI revolution is being driven by the most dominant companies in technology. Here are two top AI stocks trading at reasonable valuations to add to your investment portfolio this month.
Image source: Taiwan Semiconductor Manufacturing.
1. Taiwan Semiconductor Manufacturing
The leading chip manufacturer is a no-brainer stock to consider buying right now. Shares of Taiwan Semiconductor Manufacturing (TSM +0.42%) are up 50% year to date, continuing the company's long history of delivering market-beating returns for shareholders.
TSMC is in a very profitable position of making chips for the leading chip designers like Nvidia and Advanced Micro Devices. It makes the investment in advanced chipmaking equipment so that these companies can execute their strategy of designing the best chips in the world.
NYSE: TSM
Key Data Points
Management expects to deliver 20% compound annual growth in revenue through 2029. TSMC supplies chips for just about everything: consumer electronics, smartphones, and high-performance computing. But AI is where the company is seeing the greatest velocity in demand. The company's outlook calls for over 40% annualized revenue growth, specifically from AI chips, over the next several years.
During the company's second-quarter earnings call with analysts, CEO C.C. Wei noted the growing demand for AI models influencing its long-term forecast: "The explosive growth in token volume demonstrates increasing AI model usage and adoption, which means more and more computation is needed, leading to more leading-edge silicon demand."
Given the company's favorable outlook, the stock appears to offer solid value even after the strong run this year. It trades at a forward price-to-earnings (P/E) multiple around 24 using 2026 earnings estimates, which should support excellent shareholder returns over the next five years.
Image source: Getty Images.
2. Meta Platforms
Meta Platforms (META 0.55%) emerged as a major player in the AI arms race. It invested heavily in AI infrastructure to support growth in its products and services, including its social media apps, AI-driven ad technology, and AI-powered smart glasses in collaboration with Ray-Ban.
The fundamental advantage for Meta is that it has half the planet using its social media services like Facebook and Instagram. This translates to robust advertising revenue and profits that it can reinvest in data centers and chips for an AI-driven future. Analysts expect Meta's revenue to be up 19% this year to reach $196 billion, with earnings per share expected to grow 18% to $28.19, according to Yahoo! Finance.
NASDAQ: META
Key Data Points
Management continues to plow its money into more infrastructure. Full-year capital expenditures are expected to be as high as $72 billion to support AI initiatives and business operations. The investments in its ad technology are paying off with more relevant ads that are driving solid growth in advertising revenue.
A key priority of CEO Mark Zuckerberg in 2026 is growing the company's head count for AI development. This is to accelerate the build-out of Meta Superintelligence Labs that will guide its efforts on AI models and product initiatives.
During Meta's Q2 earnings call, CFO Susan Li suggested that these investments could even expand Meta's addressable market to new services or products over time: "We expect the significant investments we're making now will allow us to continue leveraging advances in AI to extend those gains and unlock a new set of opportunities in the years to come."
This is a financial powerhouse of a business that is using AI to grow the value of the business for shareholders. Zuckerberg appears determined to make Meta a leading AI company, and the stock's valuation does not fully account for this potential. Using Wall Street's 2026 earnings estimates, investors can buy the stock at a reasonable forward P/E of 24.
