According to research at Statista, the global artificial intelligence (AI) market is forecast to compound at over 36% annually through 2031, surpassing $1.6 trillion. Emerging submarkets, like robotics, computer vision, autonomous sensor technology, and others, are contributing to AI's vast growth.
That suggests the artificial intelligence era is still in its early innings. This goes far beyond OpenAI's ChatGPT. The broader AI opportunity could ultimately take decades to fully play out, much like the internet has before it.
Admittedly, many of today's AI stocks have already soared to high prices. But as they continue to thrive, they have a good shot at growing into and beyond their current valuations as the AI market continues to expand over the coming years.
Investors can own these three AI winners for under $3,000. Their market leadership and growth opportunities make them ideal cornerstones of a long-term, forward-looking portfolio.
1. The dominant force in data centers
Nvidia (NVDA 0.71%) has thrived as the overwhelming leader in AI chips used in data centers to train and operate AI models. The chips operate in clusters, using CUDA programming to allow simultaneous calculations, a crucial factor in AI's ability to process vast amounts of data quickly. Industry experts estimate that Nvidia's AI GPU market share is as high as 92%.
NASDAQ: NVDA
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It bodes well for the future, too. Industry researchers believe that global data center spending could surpass $5.2 trillion by 2030, with an additional $1.5 trillion needed for traditional IT applications. Nvidia is highly likely to capture a lot of that growth, even if some of Nvidia's customers try to diversify away from such heavy dependence on Nvidia's hardware.
Over time, look for Nvidia to find new opportunities outside of data centers. The company is already looking at AI robotics, self-driving vehicles, and miniaturized AI computers as potential avenues for long-term growth. The company's current positioning gives it an inside track to sustaining its AI leadership, making the stock a no-brainer to buy and hold.
2. This company dominates the internet
Alphabet (GOOG 2.16%)(GOOGL 2.37%), Google's parent company, is likely to play a pivotal role in AI's story. The company's Google ecosystem has a stranglehold on the internet via its search engine business and free web applications. This gives it a treasure trove of first-party data that it has used to quickly establish itself as one of the top AI companies, with its flagship model, Gemini.
NASDAQ: GOOGL
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But Alphabet is even more than that. Its Waymo subsidiary has become a leader in self-driving vehicle technology as its autonomous ride-hailing service expands across the United States. That positions Alphabet as an early leader in various AI submarkets, including AI infrastructure via Google Cloud, AI models via Gemini, and self-driving vehicles via Waymo.
The stock was in distress earlier this year, when regulators sued to try to break up Alphabet's internet search empire. However, it appears that it avoided any worst-case scenarios, and the stock surged in response. Alphabet's dominance in numerous industries across its business segments makes it a table-pounding buy for any long-term investor seeking broad technology exposure in their portfolio.
3. This chip manufacturer wins in almost any AI scenario
Chips (semiconductors) are essentially the building blocks of technology. Taiwan Semiconductor Manufacturing (TSM 1.07%) is the world's leading foundry, or a company that manufactures chips. Most of the leading chip companies, including Nvidia, don't actually manufacture their chips. They outsource the production to companies like TSMC (as it is also known) instead.
NYSE: TSM
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TSMC's advantages in equipment, production capacity, and cutting-edge technology have enabled it to dominate and continue increasing its market share. For instance, the company uses a custom manufacturing process to produce Nvidia's flagship Blackwell AI chips. As a result, TSMC's market share has risen from 63% in early 2024 to 71% now.
Investors can be reasonably sure that technological innovation, including AI, autonomous vehicles, and robotics, will all command higher quantities of increasingly complex chips over time. Rather than try to guess which individual chip companies will come out ahead, investors can instead look to TSMC as the common denominator, the one company likely manufacturing for most of them.
