Looking past all the talk of on-again, off-again tariffs, it's easy to forget that we are perhaps in the midst of the biggest technological shift in our lifetimes, thanks to the potential of artificial intelligence (AI). If this is true, then investors are certainly going to want to jump onto stocks of AI leaders and hold for the long term.
Let's look at four AI growth stocks to buy now.
Image source: Getty Images.
1. Nvidia
Nvidia's (NASDAQ: NVDA) graphics processing units (GPUs) have become the backbone of AI infrastructure thanks to their fast processing speeds, making them well-suited for running processor-intensive AI workloads. Meanwhile, the company has created a wide moat against potential competitors with the help of its CUDA software platform.
Nvidia originally created the software platform to allow developers to program its chips for tasks outside their original purpose of speeding up graphics rendering in video in an effort to expand the market of GPUs. However, it didn't stop there, and in the years since, it has built a collection of high-performance computing libraries and tools that help improve the performance of its chips with AI tasks. This has led it to take a dominant market share of more than 80% in the GPU space.
As such, the company has become the biggest beneficiary of the AI data center build-out. Where AI spending goes, Nvidia's revenue and profits are sure to follow. This is both the biggest opportunity and risk for the company moving forward, but at this time, spending continues to rise as cloud-computing companies, AI model start-ups, large enterprises, and even countries pour money into the space so as not to be left behind.
2. Palantir Technologies
Data gathering and analytics provider Palantir Technologies (NASDAQ: PLTR) has become one of the best growth stories in AI. Instead of trying to create the best AI model, Palantir has instead focused its efforts on garnering the power of these AI models to help solve real-world problems. It does this by gathering data from a multitude of sources and structuring it into an "ontology," linking data to real-world objects and processes.
While Nvidia's GPUs serve as the backbone of AI infrastructure, Palantir's AI Platform (AIP) serves as the backbone for how organizations actually use AI in the real world. AIP helps customers connect AI models to their data and workflows to solve practical business problems. More recently, Palantir has rolled out AI agents within AIP, which can automate processes and even take action, pushing AI from insight to execution.
The stock's valuation and government budget cuts are the biggest risks Palantir faces, but with its technology now being embraced across sectors for various tasks, the opportunity in front of it is huge.
3. Taiwan Semiconductor Manufacturing
Manufacturing advanced chips from companies like Nvidia isn't easy, which is why leading semiconductor contract manufacturer Taiwan Semiconductor Manufacturing(NYSE: TSM) has become an invaluable part of the semiconductor value chain. Given the upfront costs, complexity, technological expertise, high utilization, and scale needed to profitably run a fab (chip manufacturing plant), most semiconductor chip design companies today outsource their manufacturing. As its biggest competitors, Intel and Samsung have struggled with their foundry businesses, TSMC has become the go-to maker of advanced chips and a critical partner to semiconductor companies.
As such, TSMC is well-positioned to continue to benefit from the growing demand for GPUs and other chips that are fueling the AI infrastructure boom. The company is working closely with its largest customers to expand capacity based on their demand projects, while its technological leadership in the space has given it strong pricing power. That's a powerful combination.
Like Nvidia, its biggest risk would be an AI infrastructure spending slowdown, but right now, most signs point to continued robust chip spending.
4. Alphabet
While there have been some concerns that AI could disrupt its prized Google search business, Alphabet(NASDAQ: GOOGL)(NASDAQ: GOOG) looks poised to be an AI winner. Its cloud-computing business Google Cloud has been seeing strong revenue growth and operating leverage, which have led the segment to see its profitability begin to soar. Customers are attracted to its AI cloud services due to the strength of its leading Gemini AI model and strong analytics platform. In addition, the company has developed its own custom AI chips that enhance performance and use less power, leading to improved efficiency and lower costs.
Meanwhile, when it comes to search, the company has big distribution and network advantages that should not be overlooked. Google is the default search engine for most devices and browsers through its Android operating system, Chrome browser, and revenue-sharing deals with companies like Apple. In addition, the company has spent decades building out an ad network that can cater to both local companies and global brands. With the company historically only serving ads on 20% of its search queries, AI should become more of an opportunity than a challenge.
At the same time, it is expensive to run AI-powered search. It was recently revealed that upstart AI search Perplexity AI is burning through a ton of cash as it spends heavily on third-party AI models and cloud-computing services, while losing money on trial users and those on its free tier.
Overall, Alphabet is well positioned to benefit from AI with both Google Cloud and search, while also having another promising business with Waymo, its robotaxi business that has been growing rapidly.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Apple, Intel, Nvidia, Palantir Technologies, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
