3 Straightforward AI Stocks to Buy Now

With demand for cutting-edge AI chips soaring, it’s no surprise that demand for foundry services has also skyrocketed – and one company has benefited more than any other: Taiwan semiconductor manufacturing (NYSE:TSM)or TSMC for short. His two biggest competitors, Intel And Samsung (each of which has its own foundry and chip design arm) struggled, leaving TSMC to become the world’s leading contract semiconductor manufacturer, benefiting from both economies of scale and technological advantages.

Customers include the world’s leading chip manufacturers Apple, Broadcomand Nvidia. The difficulties of its competitors have also given the company strong pricing power; TSMC will increase its prices again next year. This also results in higher gross margins for the company.

In this context, TSMC appears well-positioned to remain a solid AI winner. The stock is now attractively valued with a price-earnings ratio of 23 and a PEG of 1.19.

alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) is perhaps the biggest beneficiary of the AI ​​trend’s cloud computing infrastructure. Google Cloud’s revenue growth accelerated to 35% in the latest quarter as the unit’s revenue reached $11.4 billion. This growth rate was faster than both Amazon’s AWS (19%) and Microsoft’s Azure (33%). More importantly, this high-fixed-cost company has reached a turning point in profitability. As a result, the segment’s operating profit skyrocketed. Operating income rose to $1.95 billion in the third quarter from $266 million a year ago and $1.2 billion in the second quarter.

The company says its Gemini model has gained significant momentum and that customers are using its AI platform to build and customize models. Alphabet also calls the custom AI chip it co-developed with Broadcom a key differentiator, saying that using its custom TPUs (Tensor Processing Units) in combination with GPUs has shortened AI inference processing times and reduced costs .

Additionally, earlier this month, Alphabet unveiled its latest AI innovations with Veo 2, its next-generation video AI generator, and Whisk, its new AI image generator. The direct test results I saw comparing Veo 2 and ChatGPT’s Sora video generator, which launched just a few weeks earlier, were night and day, with Veo 2 clearly superior in every way. Other reviews also praised Veo 2 as the clear winner. Whisk has now also received good reviews.

Alphabet also announced its latest AI model, Gemini 2, which it will integrate across its entire product line, including Google Search. While some investors are concerned about AI’s potential impact on Google’s search dominance, I continue to see it as a major opportunity. Currently, Google only serves ads on about 20% of its searches, but AI overviews give it the ability to monetize the searches it hasn’t served ads for by attaching new ad formats to those AI responses.

Alphabet shares are also attractively valued and trade at a price-earnings ratio of less than 22. Given the size of the opportunity at hand, this appears to be a good level to buy the stock.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. Geoffrey Seiler holds positions at Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Intel, Meta Platforms, Microsoft, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft, short February 2025 $27 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

“3 Straightforward AI Stocks to Buy Now” was originally published by The Motley Fool