Not all investors diversify their portfolios. Some come across captivating long-term opportunities and prefer to put most of their capital to work in just those sectors. While this investing route adds risk, there are some cases where the reward can justify the added risk. Artificial intelligence looks like the megatrend of the decade and might be worth a little added risk, as long as the right AI options are selected.
For some, Nvidia was the right risk and helped produce more than its share of millionaires. But there are only a few AI stocks that have that level of potential. There are two other AI-related picks filled with potential that could also greatly outperform the S&P 500 for several years. Let's take a closer look at them.
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Iren could be an AI giant in the making
Iren (IREN 1.44%) is an AI data center provider that has a 3-gigawatt pipeline. Energy has become a key part of the AI bottleneck, and Iren is well-positioned to manage this fact. The company already secured a five-year, $9.7 billion contract with Microsoft for 200 megawatts, and its 1.4 gigawatt Sweetwater 1 site should be ready to go in April 2026.
NASDAQ: IREN
Key Data Points
That extra energy is enough to support seven deals like the Microsoft one. Iren is aiming for $3.4 billion in annual recurring revenue by the end of 2026 while leveraging only 16% of its secured grid-connected power. Iren also has a multi-gigawatt development pipeline in addition to 3 gigawatts of secured power.
Iren historically made most of its money from cryptocurrency mining. However, with AI cloud revenue growing more quickly, it has repurposed its facilities to handle the increased AI demand. The Microsoft deal alone brings in $1.94 billion in annual recurring revenue. Iren previously told investors that it expected to secure $200 million to $250 million in annual recurring revenue by the end of 2025.
Iren should be able to crush expectations and deliver far more than $3.4 billion in annual recurring revenue by the end of 2026. If that happens, Iren investors will benefit greatly from the AI surge.
Broadcom's AI chips continue to gain momentum
Broadcom (AVGO 1.25%) is a top custom AI chip designer. While Nvidia's chips handle general workloads, Broadcom's chips are custom-made for tech giants' unique needs. AI chips are the bedrock of the AI boom, and Broadcom's recent financial results show that it is still a winner.
NASDAQ: AVGO
Key Data Points
The company's sales jumped by 28% year over year in fiscal 2025's Q4, and that included a hot AI segment. Broadcom's AI sales increased by 74% year over year, and guidance suggests revenue from this segment will more than double year over year in fiscal 2026's Q1.
Broadcom also managed to almost double its net income year over year and is rapidly approaching 50% net profit margins. While Iren is a relatively under-the-radar pick, Broadcom has captured the spotlight. It's the type of stock that proves winners can keep on winning. Broadcom has gained almost 700% over the past five years and is likely to extend its gains in 2026.
