Nvidia and Broadcom are leading competitors in the computing unit space.
Taiwan Semiconductor Manufacturing is providing the chips to nearly all players in the AI arms race.
ASML’s machines are required to produce cutting-edge chips.
10 stocks we like better than Nvidia ›
Artificial intelligence (AI) investing is still the dominant theme in the stock market. This checks out, as it’s where a massive amount of capital is getting invested to build out computing infrastructure and train models. Although it seems like AI has been the prevailing market theme for some time, there are multiple indications that this will persist for several more years, making AI a great place to invest today.
I’ve got a list of four great buys in October, and investors should scoop up some shares as soon as possible.
Perhaps the biggest beneficiary of the massive AI spending spree is Nvidia (NASDAQ: NVDA). Nvidia makes graphics processing units (GPUs), which excel in workloads that require massive computing power due to their ability to process multiple calculations in parallel. Nvidia powers the majority of AI models available right now, making it an important company to listen to when management offers market predictions.
During its second-quarter conference call, Nvidia projected that data center capital expenditures will reach $600 billion this year, but expand to $3 trillion to $4 trillion by 2030. That’s monstrous growth, and Nvidia would be well positioned to capitalize on this growth if it occurs.
However, one company vying for a slice of this pie is Broadcom (NASDAQ: AVGO), which is partnering with end users to develop custom AI accelerators. While Nvidia’s GPUs are the undisputed king of computing units meant for arduous workloads, some of that flexibility isn’t required when the computing unit is only going to run one type of calculation for its entire life. That’s where Broadcom’s custom AI accelerator chips come into play.
Broadcom is designing these chips with the end user to ensure they’re optimized for the one type of workload they’ll see during their operating life. That way, Broadcom can squeeze every ounce of performance available at a cheaper price point than an Nvidia GPU.
There’s still plenty of room for both chips moving forward, by looking for Broadcom to rise a bit quicker than Nvidia over the next few years. I still think both are excellent investments, and that October is a great time to scoop up these stocks in anticipation of record-setting data center capital expenditures for 2026.
Neither Nvidia nor Broadcom can manufacture their own chips, so they outsource that work to Taiwan Semiconductor Manufacturing (NYSE: TSM). TSMC is the world’s leading contract chip manufacturer and has clients in multiple industries. This makes it a bit less concentrated in the AI investment realm, and also gives it exposure to other important trends like autonomous driving, vehicle electrification, and a smartphone refresh cycle.
All of these movements require more advanced chips in greater quantities, making TSMC a no-brainer investment option this month. Additionally, it’s slated to launch its next chip generation, 2-nanometer chips. These chips are expected to significantly reduce power consumption when configured for the same processing speed, which could decrease the already strenuous energy load. Management has already stated that demand is far higher for these chips than in previous generations, which means TSMC could have a new growth catalyst emerging over the next few months.
Creating these advanced chips requires specialized equipment. Perhaps the most specialized is the extreme ultraviolet lithography machines procured from ASML (NASDAQ: ASML). ASML is the only company in the world to build these machines, giving it a technological monopoly. This is extremely rare with how intense competition is, and whenever investors have the chance to own shares in a company with this status, they’d be smart to do so.
ASML will benefit from increased chip demand because it will require more factories to produce these chips. With TSMC building several new fabrication facilities worldwide, ASML stands to benefit.
ASML’s stock has had a strong few weeks, but that rally could continue for multiple years if demand for its products stays strong (which it should, considering the massive amount of money that’s being spent on AI infrastructure).
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Keithen Drury has positions in ASML, Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends ASML, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
4 Best Artificial Intelligence (AI) Stocks to Buy in October was originally published by The Motley Fool
