After many artificial intelligence (AI) companies recently led the Nasdaq Composite (^IXIC -2.70%) into correction territory, it’s time to start thinking about what will happen next. Many are worried that an economic slowdown triggered by unknowns around tariffs could slow AI investments and hurt many of these companies. However, there haven’t been any signs of this occurring yet, and this correction looks like a great time to scoop up some of the best AI stocks out there.
I’ve got three companies that I think can emerge stronger than ever, and investors need to pay attention to them, as they likely won’t stay beaten down for long.
Nvidia is riding a boom
Although AI hyperscalers have built a ton of computing capacity, they are far from finished. A massive amount of money is being spent on AI infrastructure, and those numbers are expected to reach record levels this year.
This clearly benefits the companies that are on the hardware side of AI, meaning companies including Nvidia (NVDA -1.51%), Taiwan Semiconductor (TSM -1.27%), and ASML (ASML -2.24%) are primed to emerge from this correction even stronger.
Nvidia has been powering the AI arms race since it kicked off, with its graphics processing units (GPUs) being the computing muscle behind AI models. GPUs can process multiple calculations in parallel, unlike a CPU, which can do one at a time. This effect can be multiplied by connecting thousands of GPUs in clusters. By doing this, AI hyperscalers can quickly train AI models.
With each generation of AI modes becoming more complex, this requires more computing capacity, and Nvidia benefits.
Nvidia CEO Jensen Huang sees massive growth in data center computing. He has predicted data center buildout of $1 trillion.
While that may be a bold projection, with the way AI spending is going, a figure like that wouldn’t surprise me. And I think Huang better understands where the industry is heading than most people do, so this prediction could be more accurate than most think.
Regardless, Nvidia’s business will be just fine over the next few years, and the most recent stock market dip looks like a great reason to scoop up shares, especially because they’re trading for 26 times forward earnings.
Considering Nvidia’s potential growth, this seems like a no-brainer price to pay for the stock, and I wouldn’t be surprised to see it soar throughout the rest of 2025.
More chips are needed to fulfill demand
More GPUs mean more chips, and with Nvidia not having the manufacturing capabilities to produce chips itself, it farms out that work to Taiwan Semiconductor. With President Donald Trump ramping up tariffs on goods imported to the U.S., TSMC in early March announced an additional $100 billion investment in U.S. production capabilities.
While critics say that Trump’s pressure caused this, Taiwan’s president and Taiwan Semiconductor’s CEO said that the reason for the U.S. expansion was the massive demand for U.S.-produced chips, which have sold out production capacity through 2027.
There is a huge demand for more chips, and Taiwan Semiconductor’s management sees significant growth ahead. They expect AI-related chip revenue to increase at a 45% compounded annual growth rate (CAGR) over the next five years, with companywide revenue increasing at around a 20% CAGR. That’s monster growth and makes for a fantastic stock to buy right now.
ASML has a key role
When you hear about chip companies standing up new facilities, you should think of ASML, which makes extreme ultraviolet (EUV) lithography machines, which are critical in the manufacturing process of high-end chips. ASML is the only company in the world with the technology to do this, so it’s a company that everyone must work with when they’re expanding production capacity.
By holding a technological monopoly, ASML is a great way to play the expansion of chip demand. With its stock off around 35% from its all-time high, right now makes for an excellent time to scoop up shares, as much better times are ahead for ASML.
Although the sell-off hasn’t been fun, it has opened up several fantastic investment opportunities in the market’s best AI stocks. Now’s a great time to pick up winning companies on sale.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
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Source: https://www.fool.com/
