The tech industry’s behemoths are pouring massive investments into data centers, and at the heart of these facilities lie graphics processing units (GPUs) tailored for artificial intelligence (AI) development. These GPUs are designed for parallel processing, making them ideal for handling vast amounts of data and multiple workloads simultaneously – a crucial aspect of training AI models and performing AI inference.
Recent financial reports reveal staggering capital expenditures (capex) from industry giants. Microsoft allocated $55.7 billion towards AI data center infrastructure and chips in its fiscal 2024 year, while Amazon spent $30.5 billion on capex in the first half of 2024, primarily focused on AI. Alphabet invested $25 billion in AI capex during the same period, and Meta Platforms plans to spend between $37 billion and $40 billion on AI capex in 2024. Oracle also committed $6.9 billion to AI capex in its fiscal 2024 year.
This surge in investment spells opportunity for the semiconductor industry, particularly for the following five top chip stocks:
Nvidia, the undisputed leader in data center GPUs, is poised to revolutionize AI inference with its Blackwell architecture. The company’s GB200 NVL72 system is expected to perform AI inference at up to 30 times the speed of its predecessor, the H100. With individual GB200 GPUs projected to sell for between $30,000 and $40,000 each, Nvidia is set to reap substantial revenue benefits.
Micron Technology, a leading supplier of memory and storage chips, is well-positioned to capitalize on the growing demand for memory capacity in AI data centers. Its latest HBM3E high-bandwidth memory units deliver up to 50% more capacity while consuming 20% less energy, making them an attractive choice for data center operators.
Axcelis Technologies, a manufacturer of ion implantation equipment, is critical to the fabrication process for CPUs, memory chips, and power devices. As AI data centers continue to drive demand for power devices and high-capacity memory chips, Axcelis is poised for significant growth.
Broadcom, a multifaceted AI organization, is experiencing significant demand for its AI accelerators and Ethernet switches in the data center segment. With revenue growth of three-and-a-half times in its AI accelerator business and fourfold growth in its Tomahawk 5 and Jericho3-AI Ethernet switches, Broadcom is well-positioned to capitalize on the AI boom.
Advanced Micro Devices, a leading chip supplier in the consumer electronics industry, is aggressively expanding into the data center segment with its MI300 GPUs. Designed as an alternative to Nvidia’s H100, the MI300 has already attracted top customers like Oracle, Microsoft, and Meta Platforms. With its upcoming MI350 GPU based on the Compute DNA 4 architecture, AMD is set to compete directly with Nvidia’s Blackwell lineup.
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