3 Stocks Poised to Thrive as NVIDIA Dominates the AI Boom
Everyone knows that NVIDIA Co. (NASDAQ: NVDA) is the leader in the technology sector and its race to provide the necessary components for artificial intelligence to grow into what most investors think it could be. However, this doesn’t mean that investors need to only pay attention to NVIDIA but rather zoom out into some of the other less crowded ideas out there.
Moving across the artificial intelligence value chain can be a great start, but of course, we should always keep NVIDIA’s success in mind. Through this, investors can land on areas like components makers that enable NVIDIA to make their industry-leading graphic processing units (GPUs), the companies that focus on data centers relying on these very chips, and even the cloud computing businesses in the market, which can only operate using this sort of technology.
These reasons are exactly why investors should keep an eye on names like Taiwan Semiconductor Manufacturing (NYSE: TSM), Broadcom Inc. (NASDAQ: AVGO), and even Alphabet Inc. (NASDAQ: GOOGL) in the coming quarters. This is especially the case if these same investors believe that NVIDIA’s success is far from reaching its full potential, as there might be much more upside in these lateral plays.
Taiwan Semiconductor Stock: Not Done Yet
Even though shares of Taiwan Semiconductor stock already trade within 90% of their 52-week highs, one fundamental driver still pushes for more upside behind this name—one investors should pay attention to in the coming quarters.
Considering that earnings per share (EPS) typically drive stock price performance, investors should note that Wall Street now forecasts up to $2.66 in EPS for Taiwan Semiconductor stock to be delivered in the fourth quarter of 2025.
Compared to today’s $2.24 EPS, that’s roughly an 18.7% growth rate, which should drive the stock higher.
Knowing that Taiwan Semiconductor stock's outlook is set for a bullish EPS path ahead, it shouldn’t come as a surprise to see analysts from Barclays reiterate a buy rating on the company as of January 2025, this time keeping a $255 per share valuation.
This new target would not only call for a new 52-week high in the stock but also for as much as a 26% upside from where it trades today, giving investors yet another reason to stick around and ride the benefits of this company being one of the main suppliers for NVIDIA’s GPU manufacturing chain.
Data Centers Mix Well With Broadcom
The other aspect that will benefit from the growth of artificial intelligence is data centers, as these are the places where models are trained and developed on massive amounts of data. This mostly requires computing power delivered by NVIDIA chips. This is where Broadcom comes into play for investors to consider.
Being exposed to this area of the market allows the company to carry more tailwinds behind it, and Barclays analysts have also noticed this recently in their ratings.
With an overweight rating on Broadcom, these analysts now see the company valued at a high of $260 per share, which, like their rating for Taiwan Semiconductor, calls for a new 52-week high along with a net upside of as much as 16% from where it trades today.
Understanding that Broadcom's path in the artificial intelligence race is relatively set, some institutional buyers were willing to take this view for themselves, such as those from the UBS Asset Management group, who boosted their holdings in Broadcom stock by as much as 1.7% over the past quarter.
This new allocation brought their net position to a massive $7.9 billion today, showing investors yet another vote of confidence coming into Broadcom stock.
Cloud Computing Is Google’s Path to Higher Prices
Last but not least, cloud computing should not be forgotten in this race for artificial intelligence development, and this is exactly where Alphabet (Google) comes into play.
By having access to the world’s search trends, text, video, and other forms of data, Google is able to feed artificial intelligence models what they need to compound themselves.
That's why analysts at Citigroup felt comfortable enough with the story to reiterate a buy rating on the stock while also laying out a valuation target of up to $229 per share. This is not only another new 52-week high for today’s list of winners but also a net upside of as much as 25.5% from today’s stock price.
It would seem that even the bearish traders, calling Google’s valuation overextended, have decided that it’s not worth the fight considering all of the bullish factors building up right now for the company in its artificial intelligence exposure.
Over the past month, Google’s short interest declined by as much as 8.2% to show signs of bearish capitulation.
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