AI-Powered Stocks Take Center Stage in 2025
The US stock market has shown remarkable resilience in the face of lingering inflation, high interest rates, and geopolitical tensions. One sector that has been driving growth is technology, particularly companies connected to the artificial intelligence (AI) trend.
Taiwan Semiconductor Manufacturing: A Critical Player in AI Infrastructure
Taiwan Semiconductor Manufacturing (TSMC) is a key player in the development of AI infrastructure. As the world’s largest contract chip manufacturer, TSMC works with major AI innovators, including hyperscalers, chip designers, and consumer tech enterprises. Management expects revenue from AI processors to more than triple in 2024, accounting for a mid-teens percentage of total revenue. Analysts forecast the global AI hardware market to grow from $53.7 billion in 2023 to $473.5 billion in 2033.
TSMC’s Dominant Position in Advanced Semiconductor Manufacturing
TSMC has emerged as a dominant player in the advanced semiconductor manufacturing space. Advanced process nodes such as 3-nanometer, 5nm, and 7nm accounted for 20%, 32%, and 17%, respectively, of TSMC’s wafer revenue in the third quarter. The company is working on expanding production capacity for its next-generation 2nm chips and doubling its advanced chip packaging capacity.
Microsoft: A Compelling Top AI Pick
Microsoft has solidified its position as a front-runner in the AI revolution while maintaining its dominance in traditional software markets. Its strategic $14 billion investment in ChatGPT developer OpenAI has proved transformational. Microsoft has integrated advanced AI technologies into its core offerings, driving revenue growth, improving customer retention, and optimizing costs.
Microsoft’s AI-Powered Growth Catalysts
Microsoft’s Azure cloud computing business is a significant growth catalyst, with revenues growing 33% year over year in fiscal 2025 Q1. The company’s gaming business has also strengthened significantly since completing the acquisition of ActivisionBlizzard. With an estimated 67% share of the global foundry market in 2025, TSMC and Microsoft seem like smart AI-powered stock picks.
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