Nvidia (NVDA +2.15%) released a nugget of information during its Q2 earnings call. It noted that it believes the big five AI hyperscalers will spend around $1.3 trillion in capital expenditures during 2027. That's a simply incredible figure, and it shows there will be much more spending on AI hardware and infrastructure in 2027.
That bodes well for several stocks, but the four I think will benefit most are Nvidia, Broadcom (AVGO -0.47%), Taiwan Semiconductor (TSM +1.94%), and Micron (MU +3.43%). If you don't own these four, now is the perfect time to scoop up shares, as the growth in 2027 could send these stocks soaring.
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Nvidia and Broadcom design the hardware
Both Nvidia and Broadcom are known as fabless design firms, meaning they design the computing units but outsource much of the fabrication to external companies. This makes them a pretty high-margin business, which is great to invest in.
Nvidia makes GPUs, the most widely used accelerated computing units in the AI community. However, some companies are looking for a more specialized approach and turning to Broadcom's design services to build a custom AI chip. The future will be a mix of both computing unit types, not an outright winner. That makes both companies worth considering, and each has some major projections for 2027.
NASDAQ: NVDA
Key Data Points
Nvidia believes its revenue will grow at 70% during its next fiscal year, which is amazing, considering it's the world's largest company. Broadcom has long touted 2027 as its breakthrough year and has projected that its AI semiconductor business will cross $100 billion in annual revenue. During Q3 (ending Aug. 2), Broadcom's AI semiconductor revenue totaled $16.7 billion, up 221% year over year. There's clearly a ton of growth remaining in this business unit, and if Broadcom delivers on its projection, the stock will be a must-buy.
NASDAQ: AVGO
Key Data Points
With the AI hyperscalers likely to ramp up capital expenditures next year, both Broadcom and Nvidia make for genius buys, as they are two of the biggest beneficiaries of this massive spending spree.
Taiwan Semiconductor and Micron make the chips
As mentioned, Nvidia and Broadcom design the chips, but they farm out the work to chip fabrication companies like Taiwan Semiconductor and Micron. These two make different types of chips and are complementary businesses. Taiwan Semiconductor makes logic chips while Micron produces memory chips.
Logic chips are at the heart of computing units like a GPU from Nvidia or a custom AI chip from Broadcom. The design of these chips can make or break a computing unit's performance, and having a top-notch manufacturer with access to the world's most advanced manufacturing technology sets it apart from competitors.
Furthermore, TSMC is the largest logic chip manufacturer by far and the only company in the world with the production capacity to meet massive AI demand. With spending rising, Taiwan Semi is well-positioned to capitalize.
NYSE: TSM
Key Data Points
Micron makes memory chips, which are far more commoditized. However, that doesn't mean these chips aren't important. However, the current pace of data center chip demand has left Micron and its peers with insufficient production capacity, and memory chip prices are soaring as a result.
Micron is benefiting from this, and with new memory chip product capacity not expected to be online until mid-2027 and into 2028, the supply crunch could last for some time. Combine that with rising spending expectations, and memory chip prices could be elevated for some time.
That makes Micron a solid stock pick alongside Taiwan Semiconductor, and both should crush the market in 2027.
