Should You Forget Tesla and Buy 2 Artificial Intelligence (AI) Stocks Right Now?

In the rapidly evolving world of technology, artificial intelligence (AI) has emerged as a game-changer, driving innovation and growth across various industries. As investors seek to capitalize on this trend, one question arises: should you forget Tesla and buy two AI stocks right now? This article explores the potential of two AI stocks, Nvidia and Taiwan Semiconductor Manufacturing (TSMC), and compares them to Tesla's growth prospects.

Nvidia and TSMC are well-positioned to benefit from the AI boom, with strong growth drivers and robust market demand. Nvidia, with its dominant market share in AI accelerators, powers AI applications and is expected to see its adjusted earnings increase at a 34% annual rate through 2027. TSMC, the world's largest contract chipmaker, manufactures Nvidia's GPUs and other AI chips, serving major tech companies and hyperscalers. The GPU market is expected to grow at a 33% CAGR between 2024 and 2029, further bolstering TSMC's prospects.



While Tesla's growth prospects are undeniable, investors should consider the key growth drivers of Nvidia and TSMC. Nvidia's GPUs power AI applications, with a market share of 80-95% in AI accelerators. TSMC, on the other hand, manufactures Nvidia's GPUs and other AI chips, serving major tech companies and hyperscalers. Both stocks have strong growth prospects, with Nvidia's adjusted earnings expected to increase at a 34% annual rate through 2027, and TSMC's GPU market expected to grow at a 33% CAGR between 2024 and 2029.



However, investors should also be aware of the potential risks and challenges faced by these AI stocks. Nvidia's reliance on cryptocurrency mining and gaming markets exposes it to volatility, while TSMC's geopolitical risks, particularly tensions with China, could impact its operations. Nevertheless, both AI stocks benefit from the growing demand for AI hardware and the semiconductor industry's core role in AI development, making them attractive long-term investments despite their risks.

In conclusion, while Tesla remains a strong contender in the electric vehicle market, investors should consider the potential of AI stocks like Nvidia and TSMC. With their robust growth drivers and strong market demand, these AI stocks offer compelling opportunities for investors seeking to capitalize on the AI boom. By diversifying their portfolios with AI stocks and considering the long-term potential of the AI market, investors can position themselves for growth while mitigating risks.