Artificial intelligence (AI) continues to be a driving theme in this market. One of the smartest ways to continue playing this trend could be with semiconductor-related stocks that are poised to continue to benefit from the ongoing data center buildout. 

Let’s look at three stocks across three different areas of the semiconductor value chain that should be long-term winners — and which investors can still scoop up this month.

Nvidia

Nvidia (NVDA) is still the undisputed leader in AI chips. It has taken an extraordinary market share in graphics processing units (GPUs), which are the primary chips used to train AI models and run inference.

Its dominance isn’t the result of simply having better chips but rather the software ecosystem it has built around them. Years ago, Nvidia offered its CUDA software platform for free to universities and research labs, which led to an entire generation of developers being trained on its platform.

This, in turn, led to tools and libraries being built on top of CUDA, creating a wide moat. The reason is that customers would not only need to rewrite a massive amount of code to switch to other chips but also have to retrain their developers on another software stack.

The company is also moving faster than ever. It has shifted to an annual chip launch cycle to stay ahead of competitors, and it’s expanding into new growth areas such as autonomous driving and robotaxis. Approval to resume sales of its H20 chips in China adds another potential catalyst, although issues still need to be worked through.

Given its GPU market dominance, wide software moat, and expansion into new AI-driven industries, Nvidia remains one of the best long-term opportunities in the AI space.

Taiwan Semiconductor Manufacturing

While Nvidia gets the headlines, Taiwan Semiconductor Manufacturing (TSM), or TSMC, is the quiet force behind the AI boom. It doesn’t design chips; it manufactures the most advanced ones for nearly every major semiconductor player in the world, including Nvidia. That makes it the ultimate AI arms dealer.

Manufacturing advanced semiconductors is a difficult business — just ask Intel, whose foundry business has been piling up losses. However, TSMC’s scale and technological expertise are unmatched, making it a vital cog in the semiconductor value chain and an invaluable partner to AI chipmakers.

As competitors like Intel and Samsung continue to struggle with smaller-node yields, TSMC has become the only reliable maker of advanced chips at scale. This has given it both pricing power and visibility into years of growth as it works closely with its top customers to increase capacity.

With demand for AI chips continuing to grow, TSMC is one of the companies best positioned to benefit. Meanwhile, autonomous driving and robotaxis could become another growth driver, as these vehicles will need to be equipped with advanced chips.

Image source: Getty Images

ASML

While TSMC manufactures the world’s most advanced chips, ASML Holding (ASML) makes the machines that make those chips possible. It basically has a monopoly on extreme ultraviolet (EUV) lithography, which is the process required to produce cutting-edge semiconductors like Nvidia’s GPUs. As such, like TSMC, ASML is another company that is a critical part of the semiconductor supply chain.

ASML’s new High NA (numerical aperture) EUV technology pushes chip manufacturing even further by shrinking node sizes, which helps make chips more powerful and energy-efficient. While each machine carries a staggering $400 million price tag, leading foundries, like TSMC, Intel, and Samsung, have already installed and begun testing them.

The semiconductor equipment manufacturing business can be lumpy, but the overall trend is still working in ASML’s favor. As more chips are needed and foundries like TSMC and Intel continue to expand their capacity, they will need more of ASML’s EUV machines. And while TSMC has balked at the high price of ASML’s new High NA EUV machines, eventually it will need to move to the technology to shrink nodes even further.

With growing demand for AI chips and a monopoly on the technology used to make them, ASML is a stock to own for the long haul.