3 Top Artificial Intelligence (AI) Stocks to Buy Before 2027 Arrives
Investors need to start thinking about which stocks will be the best performers in 2027, in order to buy them before the new year arrives. The trend I think will prevail in 2027 is the same one that was successful over the past few years: AI hardware investing.
Intelligence analysis by Llama
The article suggests that investors should consider buying stocks in companies that are well-positioned to benefit from the AI build-out, such as Nvidia, Taiwan Semiconductor, and Micron Technology. These companies are trading at attractive price tags and are expected to dominate in 2027.
Imagine you're building a really powerful computer to help with artificial intelligence. You need special chips to make it work, and companies like Nvidia, Taiwan Semiconductor, and Micron Technology make those chips. These companies are doing well because of the growing demand for AI, and it's a good time to invest in them.
Analysis
Nvidia's Dominance in AI Hardware Investing
Nvidia rode the AI build-out trend all the way to the top to become the world's largest company. It achieved this status through continued innovation and industry dominance, and despite its monstrous size, it's one of the fastest-growing companies on Earth. Thanks to Nvidia's position, it also has great foresight into what's coming because clients are placing orders years in advance.
Nvidia noted that it believes data center capital expenditures among the AI hyperscalers will surpass $1 trillion in 2027, and that the industry is on a path for $3 trillion to $4 trillion in annual data center capital expenditures by 2030 worldwide. This is an impressive projection, and it shows that even after 2027, Nvidia's growth case won't be wrapped up. That makes me confident investing in Nvidia before 2027 arrives, as there are still several more years of strong AI growth ahead.
Taiwan Semiconductor's Role in the AI Build-Out
While Nvidia may be the face of the AI build-out, it's only a chip designer; it doesn't fabricate its chips. That work is farmed out to other companies, with Taiwan Semiconductor being arguably the most important. It is a chip foundry that takes other companies' designs and fabricates them for them. Taiwan Semiconductor is the top logic chip fabricator in the world, and often produces chips for competing companies, such as being a top supplier for both Nvidia and AMD.
This places the company in a great spot to benefit from the AI build-out, regardless of whose computing units are currently the most popular. As long as there is more money being spent on the AI build-out, Taiwan Semiconductor's stock is tempting. With Nvidia's projections that AI data center spending will continue to rise over the next few years, I think it's a great stock to buy now.
Micron's Memory Chip Business
Micron is a different style of investment. It makes memory chips, which are also in huge demand thanks to the AI build-out. However, there isn't much that separates one memory chip producer from another, so this industry is fairly commoditized. Right now, there is a shortage of memory chips, causing prices to soar. However, more production capacity is being brought online, so this dynamic may not last forever.
Micron's management team has told investors that they expect the tightness in the memory chip market to persist beyond 2027. This means Micron is well-positioned to have a great 2027, and with how cheap the stock is right now, that makes it a perfect stock to consider buying.
Key points
- Investors should consider buying stocks in companies that are well-positioned to benefit from the AI build-out.
- Nvidia, Taiwan Semiconductor, and Micron Technology are good candidates for this trend.
- These companies are trading at attractive price tags and are expected to dominate in 2027.
- The AI build-out is expected to continue growing, with data center capital expenditures surpassing $1 trillion in 2027.
- Taiwan Semiconductor is a key player in the AI build-out, with a great spot to benefit from the trend regardless of whose computing units are currently the most popular.
If the trend of AI hardware investing continues, these companies could see significant growth and become even more dominant in the market. This could lead to increased demand for their products and higher stock prices.
However, there are risks associated with investing in these companies, such as the potential for a decline in demand for AI hardware or the emergence of new competitors. Additionally, the commoditized nature of the memory chip industry could lead to price pressure and decreased profitability for Micron.
