Artificial intelligence (AI) is still the leading market theme. There has seldom been a greater investment opportunity than what AI presents, and many companies are slated to produce massive returns as a result. There are several companies benefiting from AI right now, and two broad groups I can place them into are hardware providers and cloud computing companies.
Both groups warrant investments right now, and I think all six of these companies can deliver market-crushing returns over the next five years.
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The hardware companies
AI hardware is probably the best place in the entire market to be invested in. These companies are making money right now from AI because their computing units are required to run AI workloads. The most obvious stock in this area is Nvidia (NVDA 1.53%), but Broadcom (AVGO 1.63%) and Taiwan Semiconductor Manufacturing (TSM 4.96%) are also great additions.
Nvidia's graphics processing units (GPUs) are the top computing option for AI workflows. They handle a wide variety of inputs and are tasked to train AI models, as well as perform inference tasks. This performance comes at a cost, and Nvidia products are known to be pricey, but you get what you pay for.
NASDAQ: NVDA
Key Data Points
Cheaper alternatives from Broadcom are also starting to rise in popularity. Broadcom partners directly with its clients to design ASICs -- application-specific integrated circuits. These chips are designed to see one type of workload and process it efficiently. This can lead to a more cost-effective computing product, and the growth we're seeing reflects that. Broadcom expects AI semiconductor revenue to double in Q1 2026, showing that it's a worthy Nvidia competitor.
Taiwan Semiconductor is another key piece to the puzzle because it acts as the fabrication facility for companies like Broadcom and Nvidia, which design chips but do not produce them. Taiwan Semiconductor is a neutral party that will thrive as long as there is increased AI spending. Nvidia believes that AI spending will rise to $3 trillion to $4 trillion annually by 2030, up from $600 billion in 2025.
NYSE: TSM
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The big spenders of these chips are the AI hyperscalers, which include the cloud computing companies.
Cloud computing providers are spending big to profit later
Cloud computing is a key part of AI infrastructure. Most AI developers don't have access to a data center filled with the various types of computing equipment needed to create and run artificial intelligence models. So, they rent computing power from a company that has excess capabilities. This simple business model is where cloud computing comes from, and Amazon (AMZN 1.52%), Alphabet (GOOG 1.69%) (GOOGL 1.67%), and Microsoft (MSFT 0.73%) are the three biggest providers.
Amazon Web Services (AWS) was the first mover in this industry, but it has the slowest growth rates due to its size. Google Cloud from Alphabet was the last to launch, and has faster growth rates than AWS, but is a bit behind in the profitability game, as it's still working on maximizing profits in the division.
The most notable cloud computing business is Microsoft Azure. Microsoft doesn't break out this segment's profitability like Amazon and Google do, but it's also growing the fastest at a 39% growth rate in Q2 FY 2026 (ending Dec. 31). This growth rate could have been even greater if Microsoft hadn't utilized some of the new computing capacity for its own use rather than renting it out.
NASDAQ: MSFT
Key Data Points
Still, all three of these companies are slated to grow their cloud computing business massively over the next few years. Growth now is important, which is why all three of these companies are spending billions of dollars on data centers to meet the need. Because cloud computing is a rental agreement, it's a continual revenue stream that renews each month. While they will need to replace computing units as an ongoing cost, the infrastructure, including the land, utilities, and building itself, is already paid for. This will allow the profitability of these business units to soar once enough capacity is built out, making them great long-term investments in the AI space.
