The Race to AI Supremacy: 4 Companies Poised for Long-Term Success

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By Ronald Tech

Investing in artificial intelligence (AI) can be a daunting task, with numerous companies reaping the benefits of this technology trend. Whether it’s a company leveraging AI to enhance its operations or one specializing in AI software, the opportunities are vast.

However, amidst the complexity, there are key hardware components of AI that stand to be victorious regardless of which individual companies emerge triumphant. Below, we’ll delve into four companies positioned to emerge as major winners in the years ahead.

ASML: Pioneering Lithography Machines

Every computer utilized for building an AI model relies on a microchip at its core. These chips necessitate highly specialized machinery for their production, and ASML (NASDAQ: ASML) stands out as a crucial supplier in this domain. The company manufactures lithography machines, instrumental in creating the conductive traces on chips.

Semiconductors have now reached a stage where the distance between these traces is as minute as 3 nanometers (nm). For context, a human hair typically ranges from 80,000 to 100,000 nanometers in width. With smaller distances between traces, these chips become not only more powerful but also more efficient — a fundamental requirement for any device.

ASML currently commands a technological monopoly in this space, as no other entities fabricate EUV (extreme ultraviolet) lithography machines. Consequently, for those delving into cutting-edge chip production, collaboration with ASML is imperative. As a result, ASML is slated to emerge as a significant victor in this arena.

Taiwan Semiconductor: Leading Innovations in Chip Manufacturing

Taiwan Semiconductor (NYSE: TSM), as the world’s largest contract chip manufacturer, and a major adopter of ASML’s machines, plays a formidable role in this sector. The company boasts 3-nm chips and is even spearheading the development of 2-nm chips scheduled to launch by 2025. Taiwan Semiconductor’s forward-thinking ethos ensures ongoing revenue surges as it unveils these new products.

Notably, among Taiwan Semiconductor’s clientele are Nvidia (NASDAQ: NVDA) and AMD, both of which contribute another essential component to the AI value chain.

Nvidia: Harnessing GPUs for AI

Nvidia, renowned for its best-in-class GPUs (graphics processing units), is pivotal in the AI sphere. GPUs are indispensable for processing vast quantities of data and training AI models, rendering them indispensable hardware.

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When a business equips a computer for training these models, it doesn’t simply acquire a couple of GPUs; rather, it purchases them in the thousands. This surge in demand saw Nvidia’s revenue skyrocket in 2023, as the need for its GPUs reached unprecedented levels.

Nvidia’s prowess is poised to endure as long as AI remains a dominant trend, given its reliance on substantial computing infrastructure expansion.

Super Micro Computer: Maximizing AI Efficiency

Diving into the AI arena isn’t as simple as procuring a multitude of Nvidia GPUs featuring Taiwan Semiconductor chips developed with ASML lithography machines and anticipating a positive outcome. Rather, specialized servers are essential to maximize efficiency and draw out optimal performance from a supercomputer.

Here, Super Micro Computer (NASDAQ: SMCI) shines. The company specializes in designing servers for a multitude of purposes, ranging from engineering simulations to drug discovery and AI model training. Their products, highly configurable, cater to businesses seeking maximum performance from hundreds to thousands of GPUs.

As the demand for AI-infused computers permeates the mainstream market, Supermicro is primed to maintain its momentum, a factor that has propelled its stock to soar by around 140% in 2024.

A Diverse Portfolio of AI Winners

For prospective AI investors, the path to success need not be restricted to selecting a single triumphant entity. A more prudent approach involves investing in a mix of stocks encompassing critical AI suppliers, all of which are poised for imminent prosperity irrespective of the frontrunner in AI product development. These suppliers furnish the fundamental building blocks imperative for all AI models.

This elite group is destined for triumph, standing as linchpins in the blossoming AI landscape.

Keithen Drury has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends ASML, Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Super Micro Computer. The Motley Fool has a disclosure policy.