Nvidia, Taiwan Semiconductor, and Alphabet

Artificial intelligence is no longer a buzzword and is transforming industries, innovation, and the economy of the world at a rate never seen before. A lot of investors are starting to pay increased attention to stocks that would benefit most when their companies embark on integrating the AI technologies to reform products, automate workflows, and open up new potential markets. There are three outstanding leaders in the space of AI-related companies that are ready to continue a solid bull run: Nvidia, Taiwan Semiconductor Manufacturing Company (TSMC), and Alphabet. Not only is it the leading company in the current state of AI, but it has strategic positioning to enable long term growth as the relentless demand of AI infrastructure and applications increases.

Nvidia Is the Unquestionable AI Giant

There is no doubt that Nvidia has been dominant in artificial intelligence. By the 1st quarter of 2025, the corporation possessed a mind-blowing 92% share of the international GPU market. Virtually all AI data centers running machine learning, deep learning, and other advanced computing activities rely upon GPUs. The real distinction of Nvidia is it has forged a competitive edge that is far more than just hardware. More than a decade before the commercialization of AI, Nvidia had decided strategically to provide its CUDA software platform at no cost. This move enabled universities, research centers and developers across the globe to use and learn on the Nvidia platform and hence, sowing an entire ecosystem that depends on its technology.

Arguably CUDA has generated a flywheel effect. The market dominance of this company is indirectly enhanced by developers and companies that develop custom AI models and tools that optimize Nvidia hardware. The companies could theoretically match the chip design in the end but the challenge of emulating what is a well-established software ecosystem created by Nvidia that extends the entire supply chain of AI is much steeper.

Discounted cash flow analysis shows that Nvidia is well priced when weighed against its future growth in earnings. In spite of the recent big run ups in Nvidia stock price in the past few years, Nvidia is modestly priced. It sells at a price earnings-to-growth ratio (PEG) less than 0.9, which is usually regarded as cheap, particularly in the case of a firm of its magnitude, technological advantage and extensive economic moat. A combination of long-term innovation, increasing market share and reasonable valuation position Nvidia as a keystone holding investment for those looking at the future of AI.

Taiwan Semiconductor Manufacturing Drives the Core Of AI

Whereas Nvidia is the company behind the GPUs fueling the growth of AI, Taiwan Semiconductor Manufacturing Company (TSMC) is its essential manufacturing backbone. As the global leader in semiconductor fabrication, TSMC manufactures chips on behalf of a huge range of high technology leaders, among which is Nvidia and Apple. As opposed to chip designers, whose success rate can vary with product success, TSMC business model guarantees it winner irrespective of which companies lead chips design since it commands the state-of-the-art manufacturing stages upon which all competitors rely.

The technology advantage of TSMC is reflected in its capability to perform at the 7-nanometer (nm) or the 5nm process nodes, 3nm, and soon the approaching 2nm process nodes. The smaller nodes can support stronger, energy-saving, and cheaper chips which is of essential importance in the AI workloads which require huge compute capabilities. From a technology perspective, advanced nodes (7nm and below) represented 73% of wafer revenue, led by 5nm (36%) and 3nm (22%) contributions. One of the greatest strengths that TSMC has garnered through its growth is the high-profile customer relations. As an example, Apple has ensured major 2nm chip supply going live in the next few years, which is an indication of trust in TSMC capacity and production roadmap. It is expanding its manufacturing facilities and making aggressive investments in order to keep up the demand of the chips worldwide and especially in sectors of high-performance computing closely related to AI.

TSMC reported Q2 2025 revenue of NT$933.79 billion (US$30.07 billion), up 11.3% sequentially and 38.6% YoY in NT dollars. In USD terms, revenue grew 17.8% Q-o-Q and 44.4% annually, surpassing earlier guidance. The company’s gross margin stood at 58.6%, a slight sequential decrease of 0.2% despite notable margin headwinds from overseas investment and unfavorable foreign exchange rates. This trend is set to expand into the future with analysts of the industry expecting AI chip demand to increase by a compound growth rate (CAGR) of approximately 40% over the next decade to 2028. Notably, TSMC has a valuation that is attractive as it has a forward price to earnings ratio of 24 times, which based on the PEG of 0.6 implies that the market might be undervaluing its growth runway.

Alphabet reports AI as an engine of growth.

Some quarters have wondered whether AI would pose a disruptive threat to the business of Alphabet which owns Google or would be another avenue of growth. As of the middle of 2025, the reality demonstrates the use of AI does not hamper, rather enhances growth in Alphabet in most of its range segments.

Similarly, important to the success of Alphabet is its incorporation of AI in search. Its artificial intelligence technologically advanced overviews segment has recently grown to in excess of 2 billion monthly users and is promoting a rise in worldwide search requests. That has contributed to increase search revenue at 12% in the last quarter easing fears that AI could eat into traditional search advertising.

Google Cloud is soaring even beyond search with AI center-stage. Income increased by 32% to $13.6 billion during Q2, and the operating profits were more than doubled to $2.8 billion, which underlines the importance of AI in attracting businesses to use cloud services. Its own in-house designed and produced AI chips like the Ironwood processor provide more economical processes of calculating AI, which in turn are adopted, despite the achievement of actual capacity. In response, the firm is forecasting a huge capex in 2025 to the tune of $85 billion with an accent on investment in AI infrastructure.

This is not the limit of what Alphabet wants to achieve. Its Waymo Robotaxi business is growing rapidly, which makes the company one of the main players in the autonomous transport markets. As is always the case, YouTube is a major driver of growth, and its Shorts functionality brought in an increment of 13% advertising revenue in Q2 alone. Such creator tools as Veo 3 assisted by AI make the process of creation easier and the range of potential sources of monetization more convenient.

Astoundingly, Alphabet does all that growth at a valuation that is reasonable. Its forward price-to-earnings ratio is less than 19.5, and its PEG is at 0.8, which underscores it as an appealing low price, undervalued option of the stock to encompass within AI facilitated growth in various business segments.

Looking Ahead

The revolution of artificial intelligence has not come to its end yet-it is gaining momentum. The market itself is estimated to reach a 40% CAGR to 2028 just in AI chip sales as potential applications of AI broaden to data centers and cloud computing, self-driving cars and media content production. These companies that own infrastructural keystone elements of this infrastructure and ecosystem are in the best position to reap benefits.

The leadership position that Nvidia occupies in both AI hardware and software-based platforms will eventually make the company more central to AI compute workloads of increasing complexity and demands. In the meantime, the production volume and technological advantage of TSMC ensure that it will be the foundry company of choice to chip manufacturers that are on the cutting edge of performance. The example of Alphabet gives a good idea of how AI can be implemented in legacy businesses to revive growth and generate new revenues.

Investment wise, the three stocks are a diversified focused approach to ride an AI wave. Their valuations regarding growth opportunities are attractive values that they can still join as the bull market continues its second leg.

All in all, Nvidia, Taiwan Semiconductor and Alphabet are not mere beneficiaries of the emergence of AI, they are enablers and innovators of how intelligent technology changes the world. To investors who are focusing on the revolutionary change that AI will bring, these stocks are well worth considering as core positions in a portfolio intended to capture the next great technological revolution.