Finding artificial intelligence (AI) stocks with the intention of buying now and holding forever is a wise idea. There may be some companies that rise and fall, but I think these three have serious staying power and will be forces to reckon with over the next decade. The three stocks I have in mind are Alphabet (GOOG 1.49%) (GOOGL 1.42%), Microsoft (MSFT 0.41%), and Taiwan Semiconductor Manufacturing (TSM 4.54%).
All three of these stocks are in a great position, and I think each looks like a strong buy now.
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1. Alphabet
Alphabet has reemerged as a top option in the artificial intelligence realm. At first, its technology was being outpaced by several upstarts. Now, its Gemini generative AI model is among the best available. Alphabet also has an advantage that nobody else can duplicate: personal information. With your permission, Gemini can link up to photos, YouTube search history, email, and other apps to create a tailored experience just for you. No other generative AI platform can duplicate this potential, and it gives Alphabet a major advantage over anyone else.
NASDAQ: GOOGL
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Furthermore, Alphabet has resources that its competition can only dream of. While unlimited resources aren't everything in the AI arms race, it could allow Alphabet to operate at a loss for longer to choke out some of the smaller players. Then, once it has firmly established itself as the winner, it can introduce pricing packages to offset the costs of running AI.
Alphabet is in a great position to capitalize on AI, and I won't be surprised to see it be the ultimate winner a decade from now.
2. Microsoft
Microsoft is taking a different approach to the AI world than Alphabet. Instead of directly developing a large language model itself, it has chosen to partner with others. Microsoft has a large stake in OpenAI, the makers of ChatGPT, but that's not the only model users have access to. On its cloud computing platform, Azure, users have access to ChatGPT, Grok, Llama, and many others. There's a reason why Azure has been growing faster than its peers, and it mainly comes down to Microsoft staying neutral in what AI model you pick.
NASDAQ: MSFT
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Microsoft is a great neutral investment in the AI realm, and its stance will help it gradually rise as AI becomes more and more utilized.
3. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor is the backbone of most AI technology we know today. The major computing players you hear about, like Nvidia, do not manufacture any chips; they just design them. However, there's no guarantee that Nvidia's graphics processing units (GPUs) will be the best option years down the road, as other products, such as custom-designed AI chips from Broadcom, may steal the show. Regardless, chips from Taiwan Semiconductor will be used, making it a great stock to consider buying now and holding forever.
NYSE: TSM
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However, there is a concern that once AI computing capacity is built out, Taiwan Semiconductor's best days will be over. I don't think that's the case, as these computing units have relatively short lifespans. A one- to three-year lifespan is a common estimate for a GPU deployed in an AI setting, which means there will be about a semi-annual replacement cycle. That will still lead to huge chip demand even after AI hyperscalers are done putting up new data centers.
Additionally, companies like Alphabet and Microsoft are still in the early stages of building all of the data centers they have announced. It takes years for a data center to become operational once it is announced, so many of the data centers you heard about being built in 2025 may not come online until 2027. This means we're still in the early stages of Taiwan Semiconductor's AI growth, making it an excellent stock to buy now and hold for the long term.
