The market continues to be led by companies tied to artificial intelligence (AI), and as this year slowly starts to wind down, this is an area where investors should continue to look to invest. In particular, companies tied to the AI infrastructure buildout look well-positioned heading into next year.
Let's look at three stocks to buy before year-end.
Image source: Getty Images.
Nvidia
No company is better positioned in AI infrastructure than Nvidia (NVDA +1.77%). The company's graphic processing units (GPUs) have become the backbone of AI infrastructure, with an incredible over 90% market share in the GPU space.
Nvidia's growth over the past couple of years has been nothing short of spectacular. Its data center revenue has surged nearly fourfold over the past two years. And with AI spending continuing to ramp up, Nvidia is set to see its sales keep soaring.
NASDAQ: NVDA
Key Data Points
Nvidia's advantage is that it is much more than a hardware company. Almost all early AI code was written on its CUDA software platform, which makes switching costs high. Meanwhile, its proprietary NVLink interconnect system lets its chips act as a single unit, which keeps customers from mixing and matching chips within an AI cluster.
While competition is increasing, Nvidia will remain the AI infrastructure market leader for the foreseeable future. That makes the stock one to own heading into next year.
Broadcom
Another company that has become an important player in the AI infrastructure market is Broadcom (AVGO +0.73%). With companies looking for ways to reduce their reliance on Nvidia, several large hyperscalers (companies that own large data centers) have turned to Broadcom to help them develop their own custom ASICs (application-specific integrated circuits) for AI workloads.
NASDAQ: AVGO
Key Data Points
ASICs are preprogrammed and lack the flexibility of GPUs, but they can consume less power and be highly efficient at running the specific tasks, such as AI inference, for which they've been designed. The company helped Alphabet design its highly regarded tensor processing units (TPUs), and because of that, other companies have turned to it to help them develop their own custom chips. Broadcom has said that its three customers furthest along -- believed to be Alphabet, Meta Platforms, and TikTok owner ByteDance -- could be a $60 billion to $90 billion market opportunity in its fiscal 2027. That's a huge number, as Broadcom is only set to produce just over $63 billion in revenue this fiscal year.
Meanwhile, a fourth customer, perhaps Apple, has placed a $10 billion order for next year, and the company recently signed a deal with OpenAI that could turn into $100 million-per-year opportunity in the next few years.
Given that type of growth potential, Broadcom is a stock to own heading into 2026.
Taiwan Semiconductor Manufacturing
With the demand for both GPUs and AI ASICs continuing to ramp, Taiwan Semiconductor Manufacturing (TSM +0.93%) is in a prime position in the coming years. While companies like Nvidia and Broadcom design advanced chips, more often than not, TSMC is the one making them. The reason is that manufacturing advanced chips at high yields (low defect rates) at small node sizes (how many transistors that can fit onto a chip) is extremely difficult.
NYSE: TSM
Key Data Points
Due to its scale and technical expertise, TSMC has become the undisputed leader in manufacturing advanced chips. While it has competitors in Samsung and Intel, both have had their fair share of struggles. This has put TSMC in a strong position, making it a valued partner to chipmakers and an integral part of the semiconductor value chain. It's also given it strong pricing power.
Looking ahead, TSMC sees demand for AI chips growing at a mid-40% compound annual growth rate (CAGR) over the next five years. Between volume growth and price increases, that's a powerful tailwind, and makes the stock a good one to own heading into 2026.
