Make no mistake about it — artificial intelligence is powering a technological revolution. Humans now interact with machines and solve problems in ways we never have before. Machine learning and AI are being applied to image recognition, language processing and decision-making in ways that are revolutionizing the world around us. Certain companies are central to those technological changes, many of which are publicly traded. Those are the AI stocks powering the technological revolution that investors must not ignore.
AI is impacting industries across the economy. From automation to medicine to everything else, AI will change everything. Generative AI has proven especially important in the early stages of AI’s emergence. It can produce text and images that challenge human creativity.
The impact of artificial intelligence is only beginning to be understood. It will create substantial value that investors are eager to capitalize on. These three stocks are powering the revolution and making strong investments.
Taiwan Semiconductor Manufacturing (TSM)
Taiwan Semiconductor Manufacturing (NYSE:TSM) is a major player to consider if you’re interested in investing in a stock that will power the future of AI.
Before discussing the generalities that power Taiwan Semiconductor Manufacturing as one of the leading AI stocks, we must first understand the news. TSMC just raised its full-year revenue guidance above 25% on a U.S. dollar basis. It had previously been at a low to mid 20% growth range on a US dollar basis.
In the second quarter, net profits increased by 36% due to the extremely strong demand for the AI chips it produces on a contract basis for many of the world’s leading companies. Quarterly revenues increased by 40%.
The strong performance by TSMC is a strong signal to an AI sector that has been facing concerns lately. Raised guidance should help soften those fears and perhaps kickstart a renewed round of optimism around AI. The AI hardware opportunity just got restarted, and TSMC is at the heart of it all.
Nvidia (NVDA)
As I write this, Nvidia (NASDAQ:NVDA) is rebounding during premarket trading after falling 8% in the previous session. The TSMC news seems to come just at the right time for all AI stocks, including Nvidia.
Nvidia and other AI stocks faced a sharp sell-off as concerns over new regulations on Chinese chip imports reemerged. Furthermore, Trump’s comments about Taiwan reignited more speculation about the future of the AI sector and the role the U.S. will play in defending Taiwan should Trump be elected to a second term in November.
Regardless, the strong news from TSMC bodes well for Nvidia. It will likely be more than enough to prompt an AI stock resurgence. Nvidia will likely show signs of a strengthening H2, as TSMC noted the second half of 2024 will be strong.
Nvidia continues to power the AI technological revolution by producing the most powerful chips overall. It is simply an investment to make or be left behind.
ASML (ASML)
ASML (NASDAQ:ASML) will continue to deal with the threat of further sanctions, but it’s still the standard bearer in its domain. Therefore, it remains one of the best choices among AI stocks that power the revolution.
The Biden administration has floated the idea of additional sanctions to tighten export restrictions on AI equipment to China. This would directly affect ASML, making the most advanced machines to produce AI chips.
I believe political figures — Trump and Biden — will come to their senses about the economic ramifications of their recent respective comments. Each is trying to project American power through those comments, but both know that AI is a big part of tenuous economic gains at the moment. Neither is likely to jeopardize that.
That’s why ASML’s strong earnings report will take center stage, not Biden’s comments. Those better-than-expected earnings and those from TSMC are setting the stage for a strong second half for AI stocks in 2024. ASML is a key player and makes a great investment for that reason. Its EUV machines are in low supply and high demand for their application to produce the most advanced chips. That’s more important than bluster from either side of the aisle.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
