Chip Champs: 3 AI Hardware Picks to Supercharge Your Investment Portfolio

AI hardware stocks - Chip Champs: 3 AI Hardware Picks to Supercharge Your Investment Portfolio

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Longtime chip analyst Stacy Rasgon recently told Investor’s Business Daily that the development of AI infrastructure would still be occurring five or ten years from now. Moreover, Rasgon stated that Nvidia (NASDAQ:NVDA) is still benefiting from strong demand for its products, and he thinks that those who believe that the company will experience any sort of downturn soon are mistaken. Rasgon’s comments are certainly positive for AI hardware stocks other than Nvidia which are benefiting a great deal from the AI boom. Here are three such AI hardware stocks that are well-positioned to generate high profits for investors.

Astera Labs (ALAB)

Person holding smartphone with logo of U.S. semiconductor company Astera Labs Inc. (ALAB) on screen in front of website. Focus on phone display. Unmodified photo.

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Astera Labs (NASDAQ:ALAB) develops connectivity chips for cloud and artificial intelligence data centers.

Investment bank Barclays contended that Astera was poised to benefit from the ongoing proliferation of AI. The bank believes that the firm is ahead of the competition when it comes to providing data centers with the connectivity products that facilitate certain uses of AI which are likely to become much more prevalent over the long-term. Barclays started overage of ALAB with an $85 price target and an “overweight” rating.

The bank expects over 80% of ALAB’s revenue to be generated from products related to AI in 2024. As a result, I expect the firm to benefit tremendously from the continued, rapid proliferation of the technology. And in my view, that makes ALAB one of the best AI hardware stocks to buy now.

Broadcom (AVGO)

broadcom (AVGO) logo outside office building

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Broadcom (NASDAQ:AVGO) provides many types of top-notch AI hardware and AI chips, including a new ethernet switch. AVGO also offers a chip whose neural network helps it avoid AI workloads from getting too dense and slowing down. Further, the company launched Jericho3-AI switch chips last year which are competitive with the more commonly used AI switch chips. Finally, Broadcom is selling custom AI chips to the large cloud infrastructure players.

The firm’s strategy appears to be working as its revenue jumped 34% versus the same period a year earlier. Meanwhile, its earnings per share advanced 6% year-over-year to $10.99. Moreover, the firm says that it expects AI products to represent 35% of its sales this year. And it expects its financial results to be significantly boosted by higher demand for its AI products.

Also noteworthy is that Broadcom has reported that it has recruited a second major customer for its AI ASIC chips. According to Japanese bank Mizuho, that customer is Meta (NASDAQ:META).

Taiwan Semiconductor Manufacturing (TSM)

TSM stock: the Taiwan Semiconductor logo on the side of its facility in Taiwan

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Despite the market’s poor reaction to Taiwan Semiconductor Manufacturing’s (NYSE:TSM) first-quarter results, they were actually quite good. The firm’s top-line jumped 13% versus the same period a year earlier to $18.87 billion. Plus, its net income increased 9% year-over-year to $6.9 billion. Moreover, the chip maker expects its top-line to rise by an impressive total of 20% to 25% this year.

TSM reported that it was benefiting from strong sales of its high-performance computing chips which are used to create AI. According to CEO C.C. Wei, almost all the AI innovators are working with TSMC to address their demands for energy efficient computing power.

In the wake of TSM stock’s recent pullback, its enterprise value/EBITDA ratio is a very low 0.56 times.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

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