Nvidia and TSMC are two of the best ways to play the AI infrastructure boom.
Meta is applying AI across its apps to drive strong growth.
Alphabet and Amazon are two cloud computing leaders.
10 stocks we like better than Nvidia ›
Artificial intelligence (AI) is proving to be the next big technology innovation, and investors don’t have to look far to find the companies at the center of it. Some of the best opportunities in the tech sector lie with companies that are either powering the infrastructure behind AI or using it to improve their operations.
Let’s look at five top tech stocks to buy this month.
Nvidia(NASDAQ: NVDA) is the top name in AI infrastructure. Its graphics processing units (GPUs) have become the main chips used for training and running AI models, while it also offers networking equipment and can supply large, turnkey rack-scale systems it calls AI factories. However, Nvidia’s strength doesn’t just come from its powerful hardware. Its CUDA software platform long ago became the standard on which developers learned to program GPUs, creating a wide moat for the company.
Nvidia’s dominance in the AI infrastructure market was on full display in the fiscal first quarter, as it captured an over 90% market share in the GPU space. Its new Blackwell architecture is ramping up faster than any chip in its history, and demand for its AI factories continues to surge. At the same time, new verticals like automotive are starting to gain traction.
As AI infrastructure spending continues to ramp up, Nvidia remains one of the best ways to invest in the space.
While Nvidia designs the chips that are powering the AI infrastructure boom, Taiwan Semiconductor Manufacturing(NYSE: TSM) is the company that actually makes them. TSMC is the world’s largest semiconductor contract manufacturer, and one of the few companies with the technical expertise and scale to make the advanced chips used for AI. Not surprisingly, this led to strong growth, with the company’s Q1 revenue jumping 35%. High-performance computing, which AI is a part of, now makes up nearly 60% of its business.
As demand from AI customers surges, TSMC continues to expand capacity and build new fabs. It’s also been raising prices, which is leading to improved margins and growing profits. That’s a great combination.
As the undisputed leader in advanced chip manufacturing, TSMC is positioned to continue to benefit from the AI infrastructure boom.
Image source: Getty Images.
One of the world’s top digital advertising platforms, Meta Platforms(NASDAQ: META) is using AI to help drive strong growth. Its proprietary AI model, Llama, is boosting user engagement and improving ad performance across its family of apps. That’s leading to more inventory and higher ad prices. In Q1, ad impressions rose 5%, while pricing jumped 10%.
However, AI is just one part of Meta’s growth story. The company started serving ads on WhatsApp, which has over 3 billion users, and is gradually rolling out ads on Threads, its Twitter-like platform that’s already up to 350 million monthly users. These newer properties are just at the beginning of being monetized, which should lead to years of strong growth ahead.
Meta is investing heavily in AI talent, and looks to be one of the companies best positioned to benefit from the technology.
Alphabet(NASDAQ: GOOGL)(NASDAQ: GOOG) is one of the most overlooked AI plays in the market. While some investors worry about AI disrupting its search business, the reality is that Alphabet still has big advantages in distribution as well as with its far-reaching ad network.
Meanwhile, Alphabet is investing heavily in AI and other emerging technologies. Its Gemini model is considered one of the best in independent tests, while Google Cloud is the third-largest cloud computing platform and is growing quickly. The company has developed its own custom AI chips, which it both uses internally and rents out. At the same time, the company has a first-mover advantage in autonomous driving and robotaxis with its Waymo unit, while it’s also a leader in quantum computing with its Willow chip.
Overall, Alphabet has a strong collection of leading and emerging businesses and a lot of growth opportunities ahead.
While Amazon(NASDAQ: AMZN) is most often viewed simply as an e-commerce company, its largest business by profitability and its fastest-growing segment is Amazon Web Services (AWS). Amazon is the market share leader in the cloud computing industry. AI is driving growth in the segment as customers use its services to build and deploy AI models and apps and then run them on its infrastructure. Amazon also designed its own custom chips specifically for AI training and inference, giving it an edge in cost and performance.
Not to be overlooked is the company’s leadership in robotics. While Tesla touted its Optimus robot, Amazon already has over 1 million robots working in its fulfillment centers globally. Its entire fleet of robots will soon be powered by a newly launched generative artificial intelligence model called DeepFleet that will coordinate the movement of its robots for faster and more cost-effective package deliveries.
The company even has robots that can spot damaged goods before they are shipped, which helps reduce costly returns. Between its use of AI and robots, Amazon is reducing costs and becoming more efficient within its e-commerce segment.
Amazon is a company at the cutting edge of AI and robotics, and one investors should not sleep on.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool has a disclosure policy.
5 Top Tech Stocks to Buy in July was originally published by The Motley Fool
