3 Artificial Intelligence Stocks to Buy Now and Hold for Decades

Artificial intelligence (AI) is a revolutionary technology, but it will take many years, perhaps decades, to change the world. This means there is still plenty of time to position your portfolio to capitalize on AI and reap the rewards of this new technology and its long-term impact.

We know that AI chips are driving these innovations; The blue-chip AI stocks of the future could depend on this need for AI chips and which companies emerge victorious. Here are some AI chip stocks you can buy today and safely hold for decades.

1. The winner of the AI ​​chip battle

AI chips are the building blocks The technologyso it’s difficult to mention any list of long-term stocks without starting with Nvidia (NASDAQ: NVDA). The company currently holds between 80% and 90% of the AI ​​chip market.

This advantage is a moat in itself, because competitors now need to convince companies building AI architectures to switch to their chips.

The long-term opportunity for Nvidia is based on how big the AI ​​chip market can still reach. Studies point to an increase in demand for data centers in the coming years, which could lead the market to reach 400 billion dollars in the coming years – multiples larger than today.

What will this chip market be like in 2030, 2040 or 2050? No one knows how powerful AI can become, but we do know that more powerful AI requires better chips, and no one dominates the market like Nvidia when it comes to cutting-edge technology.

It’s a $2 billion company, and sustained demand for AI could keep cash flow strong enough to fund years of aggressive share buybacks and dividends that line shareholders’ pockets. It’s hard not to like Nvidia, even if it is multibagger the days are over.

2. The second chip company with advantages

It’s hard to imagine a company completely shying away from such a large and accessible market. Other companies can also find a seat at the table.

My pick for one of the other contenders is Advanced microdevices (NASDAQ:AMD). AMD has proven its ability to penetrate markets by establishing CPU footprints in personal computers and data centers against established companies Information.

There is already some evidence that AMD has also achieved success in AI. The company recently unveiled a new generation of AI chips, which CEO Lisa Su called technologically superior to Nvidia’s popular H100 chipset.

The technology continues to move the goalposts, but AMD was able to tell the market that it has received interest from major AI players Microsoft It is Metaplatforms. With data center revenue reaching “just” $2.3 billion in the first quarter, there is plenty of room for expansion, especially if the AI ​​chip market grows to be worth hundreds of billions of dollars.

The story continues

AMD is a much smaller company, with a market cap of $250 billion, a fraction of Nvidia’s size. And it may only get a small share of the AI ​​chip market compared to Nvidia. However, that doesn’t mean it can’t generate stellar investment returns on its own. Consider AMD a sneaky candidate for growth in the coming decades.

3. Who will build these chips?

Don’t assume that all these chip companies build their products – they don’t. Instead, they use companies called manufacturers to make the chips for them.

Taiwan semiconductors (NYSE:TSM) is the largest chip manufacturer in the world. According to Statista, TSMC, as it is also known, manufactures approximately 61% of the world’s semiconductors. This means it will have the most capacity and advanced tools to build the cutting-edge chips needed to power the best and brightest AI applications.

Buying TSMC stock means you don’t have to worry about which chips reign supreme, as long as they get built. In investment slang, this is called pick and shovel investing. It could be the smart way to fight an AI war that could continue for years.

This company presents some risks, mainly geopolitical concerns about China’s invasion of the country. This could mean the stock will never trade at a valuation that reflects TSMC’s growth and fundamentals.

But if you have the stomach for such risks, you’ll be hard-pressed to find another company as essential to AI as Taiwan Semiconductor. This could be a multi-decade winner if peace is sustained in Asia.

Should you invest $1,000 in Nvidia now?

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Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Advanced Micro Devices, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel, long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft and May 2024 $47 short calls on Intel. The Motley Fool has a disclosure policy.

3 Artificial Intelligence Stocks to Buy Now and Hold for Decades was originally published by The Motley Fool