Key Points
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Palantir Technologies has risen above the rest of Wall Street as the top AI software company.
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Nvidia is the backbone of AI data centers and will eventually have opportunities in adjacent AI industries.
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Taiwan Semiconductor Manufacturing will enjoy years of growth as technology drives silicon demand higher.
- 10 stocks we like better than Palantir Technologies ›
The economy tends to move in cycles when it adopts a new technology. Investments in internet technology in the 1990s laid the groundwork for today’s digital economy. Decades later, the world is gearing up for artificial intelligence (AI).
Today, companies are pouring hundreds of billions of dollars into data centers, arguably the greatest tech supercycle in modern history. AI has become a multilayered opportunity across software, hardware, and manufacturing.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Whether you’re looking to invest $5,000 or another amount, you can profit from every layer of the AI stack with these three winners.
Image source: The Motley Fool
The software layer
The software layer is where users see AI’s impact. Palantir Technologies (NASDAQ: PLTR) builds customer AI software applications on its proprietary platforms for both commercial and government customers. The U.S. military recently adopted its Maven Smart System as an official program of record, a significant milestone for the future.
At its core, Palantir’s technology ingests and analyzes data to enable AI-driven decisions in various applications. That could involve aiding a military mission from the control center, optimizing a corporation’s manufacturing supply chain, or detecting fraud for a bank. Palantir’s revenue growth has continued to accelerate since mid-2023, when it formally released its Artificial Intelligence Platform.
The company still has just 954 total customers, leaving a huge long-term runway. The stock can be volatile at times, but few companies are performing at its level right now.
Palantir’s Rule of 40 score (a financial metric for software-as-a-service businesses) was 127% in the fourth quarter of 2025. That’s impressive, with a score of 40 or higher indicating a good balance between growth and profitability. That momentum signals big things ahead as the world continues to integrate AI software.
The hardware layer
Beneath software lies the hardware layer: huge data centers with accelerator graphics processing units (GPUs) that train and run AI models. Nvidia (NASDAQ: NVDA) has been the backbone of the data center GPU market. Its chips use the company’s CUDA parallel computing platform to synchronize thousands of GPUs across clusters, making them highly effective in intensive workloads such as AI.
Nvidia dominated AI model training but isn’t resting on its laurels against its competitors. Management aims to capture the inference market, where efficiency is arguably more important than raw power, with its Vera Rubin, a chip stack, complete with multiple CPU, GPU, and networking chips all working together.
CEO Jensen Huang believes that his company’s cumulative Blackwell and Vera Rubin sales could push $1 trillion from 2025 through 2027.
The data center supercycle probably won’t last forever. Still, Nvidia’s forward-thinking has the company looking beyond data centers to on-premise AI chip opportunities, such as autonomous vehicles and humanoid robotics, where each field device will need silicon. A central role in AI innovation makes Nvidia a no-brainer to buy and hold.
The manufacturing layer
Lastly, a select few manufacturers make AI possible. Taiwan Semiconductor Manufacturing (NYSE: TSM), or TSMC for short, is the world’s largest semiconductor foundry. It’s responsible for producing Nvidia’s AI chips and, as a whole, owns about 72% of the global foundry market by revenue.
No competitor can match TSMC’s expertise in high-end chips or its high production capacity. For instance, TSMC can reportedly produce 3-nanometer wafers at a 90% yield. Samsung, despite bringing 3nm technology to market first, only achieves a 50% yield. In other words, no other foundry can consistently produce high-end silicon at the high volumes needed for AI and other fast-growing industries.
It’s not a stretch to say that TSMC is the primary engine driving innovation, since virtually every cutting-edge device or system uses silicon that it likely produces. Research from Roots Analysis estimates that the global semiconductor market will grow by 9.17% annually from this year through 2040. That makes Taiwan Semiconductor Manufacturing an obvious winner you’ll want to own over the next couple of decades.
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia, Palantir Technologies, 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.
