Investing in AI: Nvidia, Taiwan Semiconductor, and Digital Realty Trust Lead the Way

Nvidia, Taiwan Semiconductor Manufacturing, and Digital Realty Trust are top AI stocks to buy, with Nvidia holding a 90% market share in data centers and Taiwan Semiconductor leading the chip manufacturing industry with continuous innovation. Digital Realty Trust is a unique real estate investment trust focused on building and renting out data centers to capture the massive data center buildout trend.

The artificial intelligence (AI) sector has been a hotbed of investment opportunities, with several companies standing out for their innovative technologies and strong market positions. Among these, Nvidia, Taiwan Semiconductor Manufacturing (TSMC), and Digital Realty Trust (DLR) have emerged as top picks for investors seeking exposure to the AI revolution.

Nvidia (NVDA)

Nvidia, a leading technology company, has been a significant player in the AI industry, particularly in the realm of data centers. Backed by Nvidia, the AI startup Perplexity has achieved an impressive $18 billion valuation, challenging Google's search leadership. This valuation surge, from $520 million in early 2024 to $14 billion by mid-2025, underscores the growing demand for AI solutions [1].

Nvidia's stock has also garnered attention from analysts. The one-year average price target stands at $183.08, with a potential upside of 6.19% [1]. GuruFocus estimates suggest an even more significant upside of 62.58% based on its projected GF Value [1]. This positive outlook is reflected in the consensus recommendation from brokerage firms, which rates Nvidia as an "Outperform" status [1].

Taiwan Semiconductor Manufacturing (TSMC)

Taiwan Semiconductor Manufacturing (TSMC) is a leading chip foundry and a key supplier to AI players such as Nvidia, Tesla, and Apple. TSMC's position in the AI race is neutral, but its impressive growth and technological prowess make it a favorable investment option. The company's ability to continually launch cutting-edge technologies, such as its 3-nanometer chip node, has led to a significant increase in revenue, with a 26.9% rise in June [2].

Analysts expect TSMC to post a 52-percent jump in second-quarter (Q2) profit, driven by its market-leading position and technological advantages [2]. Despite challenges from US tariffs and a strong Taiwan dollar, TSMC's strong demand for AI chips and its market-leading position in the foundry industry make it a top AI stock pick [2].

Digital Realty Trust (DLR)

Digital Realty Trust (DLR) is a leading data center real estate investment trust (REIT) that has been capturing the massive data center buildout trend. The company is set to report its second-quarter 2025 earnings on July 24, with expected year-over-year growth in revenues and funds from operations (FFO) per share [3].

Analysts project a 6.4% year-over-year increase in total revenues to $1.44 billion, driven by the company's global presence and the increasing demand for data centers, particularly from industries leveraging AI and high-performance computing (HPC) [3]. The Zacks Consensus Estimate for FFO per share has remained unchanged at $1.74, indicating a 5.5% year-over-year increase [3]. Despite higher operating expenses, Digital Realty's consistent ability to meet and exceed analyst expectations suggests a promising outlook for the company [3].

Conclusion

Nvidia, Taiwan Semiconductor Manufacturing, and Digital Realty Trust are top AI stocks to watch, each offering unique opportunities in the AI ecosystem. Nvidia's leadership in data centers, TSMC's dominance in chip manufacturing, and Digital Realty Trust's focus on data center real estate make these companies attractive investment options for those looking to capitalize on the AI revolution.

References:

[1] https://www.gurufocus.com/news/2988950/nvidiabacked-ai-startup-perplexity-reaches-18-billion-valuation
[2] https://www.ainvest.com/news/taiwan-semiconductor-manufacturing-tsmc-announces-impressive-growth-neutral-ai-stock-pick-2507/
[3] https://www.digitalrealty.com/