4 No-Brainer AI Chip Stocks to Buy Right Now

As the artificial intelligence (AI) revolution continues to gain momentum, the demand for specialized AI chips is soaring. These chips are crucial for powering advanced AI models and enabling edge AI devices. With the global AI chip market projected to more than double from $123.16 billion in 2024 to $311.58 billion by 2029, investors are eager to capitalize on this growth opportunity. Here are four no-brainer AI chip stocks to consider buying right now:

1. NVIDIA Corporation (NVDA)
NVIDIA is the leading provider of graphics processing units (GPUs), which are the main chips used in AI training and inference due to their superior processing speeds. The company's CUDA software platform allows developers to program the GPUs for tasks other than graphics rendering, creating a wide moat for the company. NVIDIA's GPUs are used by many large tech companies and well-funded start-ups for developing more sophisticated AI models. With a trailing-12-month ROCE of 8.98% and a trailing-12-month EBITDA margin of 25.67%, NVIDIA is a strong performer in the AI chip space.

2. Broadcom Inc. (AVGO)
Broadcom is involved in designing custom AI chips for customers, helping them design their own ASICs (application-specific integrated circuits) for specific tasks. Broadcom's first custom AI chip customer was Alphabet, and it has since added other customers such as Meta Platforms, ByteDance, OpenAI, and Apple. Broadcom's ASICs lack the flexibility of GPUs but generally have better performance and more efficient power consumption for the specific task for which they were designed. With a trailing-12-month net income margin of 11.43% and a 13.46% trailing-12-month ROC, Broadcom is a strong contender in the AI chip market.

3. Advanced Micro Devices, Inc. (AMD)
AMD also makes GPUs for AI, but its software platform has been criticized for holding back the performance of its GPUs. AMD's GPUs are cheaper than NVIDIA's, and they tend to be deployed in AI inference, which presents narrow, well-defined use cases. AMD has been able to carve out a niche for itself in AI inference, but it has not been able to match NVIDIA's dominance in AI training. With a trailing-12-month ROCE of 8.07% and a trailing-12-month EBITDA margin of 10.56%, AMD is a solid choice for investors looking for exposure to the AI chip market.

4. Taiwan Semiconductor Manufacturing Company Limited (TSM)
TSM is the leading semiconductor contract manufacturer in the world, counting companies like Apple, NVIDIA, and Broadcom among its top customers. TSM's advanced manufacturing processes and strong pricing power have made it a valuable partner to its customers in the chip-making process. TSM's role in the AI chip market is primarily as a manufacturer, rather than a designer or developer of AI chips. With a trailing-12-month ROCE of 10.98% and a trailing-12-month EBITDA margin of 25.67%, TSM is a strong pick for investors looking to capitalize on the growth of the AI chip market.

Investors should consider these four AI chip stocks as they look to capitalize on the growing demand for specialized AI chips. Each company has its unique strengths and challenges, but all four have demonstrated strong financial performance and are well-positioned to benefit from the continued expansion of the AI chip market. As always, it is essential to conduct thorough research and consider your risk tolerance before making any investment decisions.