Three AI-focused Stocks You Might Consider Long-Term Investments for the Following Decade
AI isn't just a fad that's about to fade away; it's an integral part of modern business operations, and its influence is set to last for decades to come. If you're an investor looking for stocks to buy and hold for the next decade, consider these three AI-driven companies – Amazon (AMZN 2.39%), Alphabet (GOOG 1.62%) (GOOGL 1.60%), and Taiwan Semiconductor (TSM -1.53%).
Let's dive deeper into why these three stocks could be your best bet.
Cloud Computing Giants: Amazon and Alphabet
Cloud computing represents one of AI's most significant beneficiaries, yet it often goes overlooked. Not every company has the resources to invest in expensive supercomputers for AI, but they still require computing power to train AI models. That's where cloud computing giants like Amazon Web Services (AWS) and Google Cloud come in.
Both AWS and Google Cloud provide cutting-edge GPUs and custom AI accelerators to rent out their computing power. This setup enables clients to easily scale up or down based on their needs and store data on these models primarily used for AI training.
Many companies still rely on outdated hardware for web hosting and data storage. As these systems become due for replacement, expect a substantial migration to the cloud. This presents a massive growth opportunity for cloud computing, one that Amazon and Alphabet are well-positioned to capitalize on.
The cloud computing market is projected to expand from $676 billion in 2024 to $2.3 trillion by 2032. That's a substantial increase, and investors can't afford to miss out on this trend.
i. Amazon's Edge in the Market: Amazon Web Services (AWS) and Google Cloud are the largest and third-largest players in the cloud computing market, respectively. Their dominance secures a strong foothold in the market, which means they're in a prime position to capitalize on future growth. During the third quarter, AWS' sales rose 19% year over year to $27.5 billion, while Google Cloud record a 35% year-over-year revenue increase, posting an operating margin of 17%.
Taiwan Semiconductor: A Clear Bet for Future Technology
Taiwan Semiconductor is a chip foundry that manufactures GPUs and CPUs for various tech companies – including Amazon and Alphabet. Its customer base extends to companies requiring advanced semiconductor technology for their products, such as smartphones. Even if you own a high-tech device, chances are it contains Taiwan Semiconductor's chips.
Taiwan Semiconductor has remained at the forefront of technology advancements by launching new chip generations. For instance, while it's currently producing 3nm (nanometer) chips, it's gearing up to launch 2nm chips by the end of 2022. Beyond that, it's already planning its A16 chip for release in the second half of 2026.
This relentless pursuit of technological innovation positions Taiwan Semiconductor at the forefront of AI technology development. As the demand for AI devices increases, so will the demand for sophisticated chips, making Taiwan Semiconductor an attractive investment opportunity.
Enrichment Data:- Amazon Web Services (AWS) – AWS continues to lead the cloud computing market in terms of revenue growth, driven by its Prime membership program and AWS operations. Additionally, AWS has introduced numerous machine learning and generative AI features in recent years, further solidifying its position in the market.
- Google Cloud – Google Cloud is making waves with its advances in language models and cloud infrastructure, thereby catering to the growing need for AI technologies. Its stock is also relatively inexpensive, making it a compelling investment opportunity.
- Taiwan Semiconductor – Taiwan Semiconductor's revenue from AI processors is expected to more than triple in 2022, making up about 15% of its total revenue. Its role in the AI infrastructure, technological leadership, and strategic initiatives have also contributed to its strong fundamentals and growth prospects.
- Due to its dominant position in the cloud computing market and its continuous innovation in machine learning and generative AI features, investing in Amazon Web Services (AWS) can be a wise move for those interested in finance and technology.
- As AI devices become more prevalent and the demand for sophisticated chips increases, Taiwan Semiconductor's position as a leader in technology advancements and its continuous production of new chip generations makes it an attractive investment opportunity in the field of finance and investing.
