Key Points
Artificial intelligence (AI) isn’t a fleeting trend; it’s here to stay and will shape investors’ profits for years to come. So, I think investors should adopt a decade-long mindset and position their portfolios accordingly.
Three stocks that I think fit perfectly inside this framework are Taiwan Semiconductor Manufacturing (NYSE: TSM), Amazon (NASDAQ: AMZN), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). All three of these stocks are thriving today, yet make for great long-term picks.
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If you’re looking to deploy $1,000 and capture the upside of AI, this trio is a great place to start.
Image source: Getty Images.
1. Taiwan Semiconductor (TSMC)
Pinpointing which company will produce the most dominant computing unit is tricky. Right now, Nvidia is leading the way with its GPUs. However, it could be unseated by purpose-built AI computing chips that provide more cost-efficient solutions. However, all of these companies will need to get their chips from somewhere, which is where TSMC comes in.
TSMC is the world’s largest chip fabricator, and holds a dominant market share in nearly every category of advanced computing. AI is no different, and a large majority of companies utilize its formidable services, including Nvidia. By investing in the chipmaker rather than the designer, you can capitalize on the rising tide of data center spending. This will remain strong into the next decade, as aging computing units need to be replaced and new technology could make upgrading to the latest generation worth it.
Regardless of how it plays out, TSMC will be an integral part, and it is a solid stock to build an AI portfolio on.
2. Amazon
Amazon may not seem like an AI play, but with the majority of its profits coming from Amazon Web Services (AWS), it certainly is.
AWS’s growth is accelerating amid strong demand for AI. In the first quarter, its revenue rose 28% year over year — the best in nearly four years. That shows huge progress, and with Amazon planning to spend $200 billion on capital expenditures during 2026, it’s looking to increase its computing capacity dramatically.
That hefty investment now will lead to huge returns in the future, so investors should purchase Amazon’s stock with the expectation that the investment will pay off in a few years.
One area where Amazon sees huge growth is its custom AI chip business, which grew at a triple-digit pace during Q1. That shows that Amazon isn’t dependent on one computing designer, as its in-house chips are clearly capable of delivering performance. Otherwise, they wouldn’t be selling out capacity.
This all adds up to Amazon being a solid AI stock pick, and it’s still worth buying now.
3. Alphabet
Alphabet is in a similar boat as Amazon, as its cloud computing business is rapidly growing and an integral part of its AI strategy. Alphabet also has custom AI chips like Amazon and is selling them to a select few clients. Google Cloud had an excellent Q1, with revenue rising 63% year over year, boosted by its custom chip sales. It also improved its operating margin from 18% last year to 33% this year, indicating that its profitability is skyrocketing.
Unlike Amazon, Alphabet has chosen to develop its own generative AI model, giving it greater control over the final product. Gemini has grown to become one of the most powerful AI models available.
With deals to integrate Gemini into Apple’s products, it could become one of the most dominant generative AI firms available to invest in. That also gives it a huge advantage in the cloud computing arena, so developers will want to utilize Gemini on its native platform to maximize its potential. This makes Alphabet a solid AI stock pick over the next decade, and it could have major upside from here.
Should you buy stock in Taiwan Semiconductor Manufacturing right now?
Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:
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Keithen Drury has positions in Alphabet, Amazon, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Amazon, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
