2 Magnificent Artificial Intelligence (AI) Stocks to Buy in 2025

The artificial intelligence (AI) investment sector is a goldmine for finding companies with market potential. Nvidia (NASDAQ: NVDA) and Taiwan Semiconductor Manufacturing (NYSE: TSM) is among the stocks that I think can outperform the market over the next five years.

Nvidia is a stock that has made lots of people rich. If you had invested $10,000 in Nvidia a decade ago, you would now have about $2.7 million. Unfortunately, we don’t have a time machine to capture those returns, but Nvidia’s future looks bright.

Nvidia makes graphics processing units (GPUs)which is used to process the intense calculations needed to train AI models. GPUs have a unique ability to process multiple calculations in parallel, allowing them to outperform traditional CPUs. While there are other competitors in the GPU market, Nvidia’s products outperform them.

Wall Street analysts expect Nvidia’s revenue to increase by about 51% in its 2026 fiscal year (ending January 2026). This indicates that Nvidia’s growth is far from over. Driving this growth is increased customer spending as well as an increase in next-generation architecture, Blackwell. Blackwell GPUs drastically outperform the previous generation of Hopper GPUs and provide a significant reason to upgrade. Also, GPUs tend to have a lifespan of about three to five years, so a replacement cycle may start soon.

Additionally, Nvidia is not the expensive stock it was once portrayed to be. The stock trades for 54 times trailing earnings, which isn’t that much of a premium compared to some of its big tech peers. Nvidia is growing significantly faster than Amazon (48 times earnings), Apple (42 times earnings), and Microsoft (36 times earnings), but has only a small valuation premium to these three.

Nvidia remains a great AI stock to own, and I’m confident it can deliver the market-beating returns investors are looking for over the next five years.

Taiwan Semiconductor is moving down the value chain, making microchips inside Nvidia GPUs. TSMC makes chips for many more customers than Nvidia, but AI-related chips have given the company a huge boost.

In Q2 2023, management expected AI-related hardware to grow at a 50% compound annual rate over the next five years, at which point it would account for a low-teens percentage of revenue. However, TSMC’s results have far exceeded this projection, as AI revenue is expected to triple by 2024 and now represents a mid-teens percentage of revenue.

Taiwan Semi doesn’t see any signs of a slowdown in AI revenue (similar to Nvidia), so it’s pretty obvious that it’s set to have a great 2025. Wall Street analysts expect 25% revenue growth for 2025, but there’s another revenue booster on the horizon for 2026 In 2026, Taiwan Semi’s next-generation 2 nanometer (nm) is expected to reach mass. production. These chips can reduce power consumption by 25% to 30% when configured at the same computing power level as previous generation 3nm chips. Since electricity costs are a significant input to running a data center, this may lead some customers to upgrade their computer hardware based on the energy cost savings alone.

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Taiwan Semiconductor’s stock is also fairly cheap compared to major tech stocks, and it’s growing faster than all of them.

There are plenty of reasons to be bullish on Taiwan Semi’s stock, and I’m sure it can continue to run market-beating returns over the next five years.

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Keith Drury holds positions at Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool has one disclosure policy.

2 Magnificent Artificial Intelligence (AI) Stocks to Buy in 2025 was originally published by The Motley Fool