AI Stocks to Watch in December: Nvidia and TSMC

As the artificial intelligence (AI) revolution continues to gain momentum, investors are keeping a close eye on the companies that are driving this technological shift. Two stocks that have been particularly prominent in the AI space are Nvidia (NASDAQ: NVDA) and Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE: TSM). Let's take a closer look at these two AI stocks and their prospects for the coming months.



Nvidia: Dominance and Growth

Nvidia is a leading provider of graphics processing units (GPUs), which are essential for AI applications. The company's GPUs accounted for 98% of data center shipments in 2022 and 2023, highlighting its dominant position in the AI chip market. Nvidia's Blackwell GPU architecture promises increased computing speed and energy efficiency, further solidifying its position in the AI landscape.



Despite its dominance, Nvidia faces challenges such as increasing competition from AMD and potential margin contraction as AI-GPU scarcity wanes. However, the company's strong market share and innovative products position it well for continued growth in the AI sector.

TSMC: Diversified Customer Base and Growth Prospects

TSMC is the world's largest semiconductor foundry, manufacturing chips for various companies, including Nvidia, AMD, Apple, and others. Its diversified customer base and exposure to multiple growth opportunities within the semiconductor space make it an attractive investment option. TSMC's earnings are expected to grow by 36% this year, driven by demand for custom AI chips and generative AI-enabled smartphones.



However, TSMC's growth may be constrained by US export restrictions on AI chips and potential supply chain disruptions. The company must navigate these challenges to maintain its earnings momentum in the coming years.

Nvidia and TSMC: Key Catalysts and Challenges

Both Nvidia and TSMC face distinct catalysts and challenges that could shape their earnings prospects in the coming years. For Nvidia, its market share dominance and innovation are primary catalysts, while increasing competition and potential margin contraction pose challenges. TSMC benefits from its diversified customer base and growth opportunities in custom AI chips and generative AI-enabled smartphones. However, US export restrictions and supply chain disruptions may constrain its growth.

Investors seeking exposure to the AI revolution should consider these two AI stocks, Nvidia and TSMC, as they offer compelling growth prospects and dominant positions in their respective markets. By understanding the key catalysts and challenges facing these companies, investors can make informed decisions about their portfolios and capitalize on the ongoing AI revolution.

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