Key Points

• Nvidia has ownership stakes in "neocloud" companies Nebius Group and CoreWeave.

• While each company is positioned to benefit from investments in AI infrastructure, CoreWeave's growth prospects appear more robust over the long term.

• Wall Street is forecasting CoreWeave's revenue to triple over the next couple of years, which should help pave a path to profitability.

• 10 stocks we like better than CoreWeave ›

Following the end of each quarter, financial services firms that manage over $100 million in stocks are required to file a form 13F with the Securities and Exchange Commission (SEC). These filings represent an itemized breakdown of all the stocks that the fund bought and sold during the most recent quarter.

While investors may not realize it, corporations can also invest their cash into equity positions of other businesses. According to Nvidia's recent 13F filing, the semiconductor darling currently holds positions across six stocks. Two of its holdings are spread between artificial intelligence (AI) data center stocks, Nebius Group and CoreWeave (NASDAQ: CRWV).

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Fresh off a hot initial public offering (IPO) earlier this year, CoreWeave has emerged as an integral player in the AI infrastructure market. Let's dive into CoreWeave's business and explore how the company is transforming the AI landscape.

What does CoreWeave do?

For the last few years, investors have learned about the important role that advanced chipsets known as graphics processing units (GPUs) play in the development of generative AI. The GPU market is largely dominated by Nvidia and Advanced Micro Devices, both of which are able to command hefty price tags for their coveted data center hardware.

While AI has served as an unprecedented tailwind for the chip market, one of the subtle nuances is that this demand has brought a series of complications to supply and demand dynamics.

This is where CoreWeave comes into play. CoreWeave operates as a "neocloud," which is a specialized type of business that allows companies to access GPU architecture through cloud-based infrastructure. This flexible model appeals to businesses that may not be able to purchase GPUs directly from Nvidia or its cohorts due to rising price dynamics.

Image source: CoreWeave.

By offering an agile and potentially more affordable model than cloud hyperscalers such as Microsoft Azure, Amazon Web Services, and Google Cloud Platform, CoreWeave has been able to attract a number of high-profile customers and ink a series of multiyear, billion-dollar deals.

What does CoreWeave's growth look like?

For the quarter ended March 31, CoreWeave generated $982 million in revenue -- up 420% year over year. While the company's net loss widened more than twofold compared to the year-ago quarter, CoreWeave has some catalysts that should quickly turn around the dynamics of its profitability profile. See estimates in the chart below.

CRWV Revenue Estimates for Current Fiscal Year data by YCharts

During the earnings call, management raised guidance for both revenue and capital expenditures (capex). While more spending may stifle profitability in the short term, these investments are necessary foundations for the longer-term opportunity in AI infrastructure.

As Wall Street's estimates pictured in the chart above showcase, CoreWeave's investments today should help secure more access to Nvidia's Blackwell GPU architecture and should ultimately serve as a tailwind for more accelerated growth down the road.

Image source: Getty Images.

Is CoreWeave stock a buy right now?

In the chart below, I compare CoreWeave to Oracle on a price-to-sales (P/S) basis. Oracle is also a leading player in infrastructure-as-a-service (IaaS), having just signed a $30 billion cloud deal of its own, so it's comparable to CoreWeave. That single deal is expected to bring in nearly twice the amount of CoreWeave's total 2027 revenue. And yet, investors are placing a twofold premium on CoreWeave's P/S multiple when compared to Oracle.

CRWV PS Ratio data by YCharts

I think there are a couple of nuances to point out when it comes to CoreWeave's valuation relative to a peer such as Oracle.

First, Oracle is experiencing a transition period -- effectively replacing slow-growth (or no-growth) segments of the business with its new, budding data center infrastructure operation. For this reason, investors are likely applying a discount to Oracle relative to a high-growth AI stock such as CoreWeave.

Moreover, CoreWeave completed an IPO earlier this year. Since then, the company has inked an $11.2 billion deal with OpenAI, announced the planned acquisition of Core Scientific to bolster its platform, and earned a spot in some of Wall Street's most respected institutional portfolios.

This confluence of factors is more than enough to garner outsize excitement and enthusiasm from investors. For these reasons, I'm not surprised to see CoreWeave trading at such a premium.

I think the most prudent course of action for investors is to buy CoreWeave stock at different price points over a long-term time horizon. If you invest the same amount of money at set time intervals, that is known as dollar-cost averaging, and can help mitigate risk by removing specific timing and price points from the equation.

Overall, I see CoreWeave as a compelling opportunity that is well positioned to dominate the infrastructure chapter of the AI narrative. If I could buy only one Nvidia-backed data center stock, CoreWeave would be it.

Should you invest $1,000 in CoreWeave right now?

Before you buy stock in CoreWeave, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CoreWeave wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Adam Spatacco has positions in Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Microsoft, and Nvidia. The Motley Fool recommends Nebius Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Navitas Semiconductor (NASDAQ: NVTS) is emerging as a pure‑play powerhouse in gallium nitride chips, powering artificial intelligence (AI) data centers and electric vehicle (EV) systems. With Nvidia (NASDAQ: NVDA) and Powerchip deals lighting the fuse, could this under‑the‑radar stock skyrocket? I unpack the breakthrough tech, explosive partnerships, and market headwinds -- what every savvy investor needs to know now.

*Stock prices used were the market prices of July 18, 2025. The video was published on July 26, 2025.

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Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Rick Orford has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Rick Orford is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link, they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

Key Points

• Nvidia has the most powerful computer chips, and the major AI developers rely on them to drive their businesses.

• The total AI opportunity is expected to increase at a high rate over the next five years.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) has been that rare stock that has catapulted investors to millionaire status on its own. But up more than 1,500% over the past five years, and with a $4 trillion market cap, can it really still offer growth for investors?

It can. Here's why.

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Image source: Nvidia.

The age of AI

All signs are that artificial intelligence (AI) will continue to drive innovation over the next few years as more businesses see how it can help them succeed and grow. As there's greater development in AI, it becomes cheaper and more abundant, and companies that aren't using it to become more efficient and user-friendly are losing out.

Nvidia is the leader in the graphics processing units (GPU) that power these trends, with an overwhelming amount of market share. The AI market is growing at a fast pace, and the major players, like Amazon and Microsoft, need Nvidia's powerful chips to drive their efforts. Even companies like Amazon that are creating their own chips to offer more budget-conscious options still partner with Nvidia for their larger clients' needs.

According to Statista, the AI market is expected to increase at a compound annual growth rate (CAGR) of 26.6% over the next five years. That's slower than Nvidia's current revenue growth. If you can imagine Nvidia keeping up such a CAGR for its own sales, keeping its price-to-sales ratio constant, that would lead to its stock price nearly tripling.

Even if the price-to-sales ratio decreases, there could be some serious gains ahead for Nvidia investors over the next five years and beyond.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• Alphabet now expects to lay out $85 billion in capital expenditures this year -- up from a previously planned $75 billion -- and expects to further accelerate that spending next year.

• Alphabet's AI capex will be allocated toward servers, accelerated data center buildouts, and cloud computing infrastructure.

• Rising AI infrastructure spending from hyperscalers such as Alphabet bodes well for Nvidia and its thriving GPU business.

• 10 stocks we like better than Nvidia ›

Over the next several weeks, companies will report financial and operating results for the second quarter of 2025. As usual, technology investors will be focused on one thing: artificial intelligence (AI).

"Magnificent Seven" member Alphabet kicked things off earlier this week, reporting robust results across its search, advertising, and cloud computing divisions.

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While Alphabet shareholders should be encouraged by the internet giant's strong performance, I saw Nvidia (NASDAQ: NVDA) as the real winner from the company's second-quarter performance.

Let's dig into some of the important moves Alphabet is making and assess how Nvidia is benefiting from them.

Alphabet is picking up the pace on AI infrastructure construction

During the Q2 earnings call, Alphabet's management updated some details of its financial guidance. Alphabet now plans to spend around $85 billion on capital expenditures (capex) in 2025. Of note, this is a $10 billion increase over the company's prior guidance.

And there's more. "Looking out to 2026, we expect a further increase in capex due to the demand we're seeing from customers as well as growth opportunities across the company," said Chief Financial Officer Anat Ashkenazi.

Despite its increasingly aggressive spending on AI infrastructure over the last few years, Alphabet has stated that it doesn't plan on slowing down anytime soon. This should be music to Nvidia's ears.

GOOGL Capital Expenditures (TTM) data by YCharts.

Why is this good for Nvidia?

Management consulting juggernaut McKinsey & Company is forecasting that AI infrastructure spending could reach $6.7 trillion by 2030. And its research suggests that almost half of that money will be allocated toward AI hardware for further data center construction.

In addition, research from Goldman Sachs and JPMorgan indicates that generative AI could add between $7 trillion and $10 trillion to global gross domestic product in the long run.

From a macroeconomic perspective, these secular trends bode well for Nvidia's compute and networking empire. Moreover, I think that Alphabet's decision to bump up its AI infrastructure spending again adds some credibility to those industry forecasts.

Alphabet's management specified that it is raising its planned capex in order to accelerate the construction of data centers and position itself to fill the rising demand for capacity on the Google Cloud Platform.

Increased spending on network equipment, servers, and cloud infrastructure should lead to rising demand for graphics processing units (GPUs). I see this as a major positive development as Nvidia is still scaling up production of chips made using its latest Blackwell architecture.

Considering Nvidia holds an estimated 90% share of the data center GPU market, I see Alphabet's investments in AI infrastructure as a major tailwind for the chip king and further propels the company's momentum over competition in the chip space.

Image Source: Getty Images.

Is Nvidia stock a buy right now?

With a market cap north of $4.2 trillion, Nvidia is currently the most valuable company in the world. While this might lead one to assume that the stock is expensive, its underlying valuation trends tell a different story.

NVDA PE Ratio (Forward) data by YCharts

Nvidia currently trades at a forward price-to-earnings (P/E) multiple of 40. While this isn't "cheap" by traditional benchmarks, it is notably lower than the peak levels Nvidia has witnessed during the AI revolution.

What makes these dynamics interesting is that Nvidia's growth trajectory is arguably far stronger today than it was 18 months ago when its forward P/E valuation peaked. The company remains at the center of the AI revolution, providing massive amounts of fast parallel-processing power to hyperscalers and accelerating AI workloads.

To me, buying Nvidia stock at its current price is a no-brainer, and I see Alphabet's rising AI infrastructure spending as a long-term catalyst that should not be overlooked by growth investors.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

JPMorgan Chase is an advertising partner of Motley Fool Money. Adam Spatacco has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Alphabet, Goldman Sachs Group, JPMorgan Chase, and Nvidia. The Motley Fool has a disclosure policy.

Key Points

• Spending on artificial intelligence could reach an astounding $4.8 trillion by 2033.

• Nvidia's GPUs are critical for the training and deployment of complex AI models.

• AI developers want the best cloud infrastructure, and Amazon leads in this area.

• 10 stocks we like better than Nvidia ›

Fortunes have been made by investing in artificial intelligence (AI) stocks. But there's still a lot of room left to go. The United Nations, for instance, believes that the AI market will grow from $189 billion worldwide in 2023 to nearly $5 trillion by 2033. Want to make sure your portfolio benefits? The two AI stocks below are for you.

Nvidia remains the smartest AI investment

When it comes to AI stocks, Nvidia (NASDAQ: NVDA) is king. Even if you're already familiar with this stock, there's a good chance that shares are much cheaper than you realize.

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If you've been following the AI market, you'll know that Nvidia is the most valuable GPU maker in the world. GPUs sit at the heart of the AI revolution. They're critical for training and deploying complex AI models. They also make it possible for end users to access these models en masse from anywhere in the world.

Right now, Nvidia's GPUs dominate the market. The firm has an estimated 90% market share for AI GPUs. Its performance and ecosystem advantages have granted the company the highest gross margins in the industry. Wall Street analysts are unsurprisingly excited.

Wedbush Securities analyst Dan Ives believes Nvidia's market cap will surge to $5 trillion within months. The biggest near-term catalyst: the decision by the U.S. government to allow Nvidia's new GPUs to be exported to China, a country that previously accounted for around 13% of the company's sales.

While shares are expensive based on trailing earnings, the stock trades at just 39 times forward earnings. Considering the AI boom is expected to persist for a decade or more, expect Nvidia to maintain double-digit annual growth rates for years to come. This should quickly eat into the upfront valuation premium, making shares a relative bargain for patient investors.

Image source: Getty Images.

Amazon is an artificial intelligence powerhouse

Apart from Nvidia, Amazon (NASDAQ: AMZN) stock looks like one of the best ways to invest in the AI revolution over the long term. That's because its most profitable business segment, Amazon Web Services, sits at the center of everything AI.

We've already discussed how Nvidia's GPUs sit between AI developers and the end users themselves. But there's one other industry that also sits at the center of the action: cloud infrastructure providers. Most estimates believe Amazon's AWS division is the largest cloud infrastructure provider in the world. Data compiled by Statista gives AWS a 30% global market share, nearly as much as the next two competitors combined.

While the data center industry is a bit more commoditized than the GPU market, there's clear differentiation by the players that can afford to invest at scale. Developers -- AI developers in particular -- want the best infrastructure possible. That includes the best hardware and the most locations from a geographic perspective. This makes it quicker, cheaper, and more convenient for customers.

As the largest cloud provider in the world, Amazon is second to none in its ability to invest and expand its network. This should continue to place AWS at the center of increased spending.

"Companies are spending and they're spending more, and they plan to spend even more," Baird analyst Colin Sebastian recently told GeekWire. "We did a survey last month of 100 corporations, and 87% of them said they will increase spending on Gen AI over the next year -- and a grand total of zero out of 100 said they would spend less."

The AI spending boom is real. Demand should grow by 20% to 30% annually for years to come. With Amazon trading at 37 times earnings, most of its growth in this area is masked by its relatively slower growing e-commerce division. But as AWS becomes a bigger driver of Amazon's overall business, we could see growth rates accelerate, making shares a relative bargain in hindsight.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.

Key Points

• Nvidia has played a pioneering role in the proliferation of AI, but it wouldn't have been possible without this company.

• Nvidia, along with many other chip designers and consumer electronics companies, relies on the manufacturing expertise of this Taiwan-based giant.

• The wide range of industries that this Nvidia partner caters to makes it one of the best ways to play the global AI boom.

• 10 stocks we like better than Taiwan Semiconductor Manufacturing ›

Nvidia (NASDAQ: NVDA) is considered a pioneer in the artificial intelligence (AI) hardware market, and rightly so, as the chip designer's graphics processing units (GPUs) have allowed cloud computing companies and others to train AI models and run inference applications.

The parallel computing power of Nvidia's GPUs makes them ideal for performing a large number of calculations simultaneously, which is precisely what's required for training AI models. Also, these chips are now gaining traction in AI inference as well, thanks to their ability to quickly make predictions and decisions using the trained model.

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Not surprisingly, Nvidia has established a solid foothold in the AI chip market. It towers above its competitors with an estimated market share of 80% in AI data center accelerators. However, Nvidia's dominance wouldn't have been possible without its foundry partner Taiwan Semiconductor Manufacturing (NYSE: TSM), which is the real kingpin of the AI chip market.

Let's look at the reasons why TSMC is a bigger power player than Nvidia in AI chips.

Image source: Getty Images.

TSMC's dominant foundry position makes it the go-to manufacturer of AI chips

TSMC operates semiconductor fabrication plants across the globe, which are used to manufacture chips based on designs provided by its customers. It is worth noting that TSMC doesn't design its own chips. It simply makes chips for fabless semiconductor companies that don't have production facilities of their own.

Nvidia is one such company that utilizes TSMC's facilities for manufacturing its AI chips. Equity research and brokerage firm Bernstein estimates that Nvidia could account for over a fifth of TSMC's top line this year, up significantly from around 5% to 10% a couple of years ago. That's not surprising, as Nvidia has been aggressively looking to secure more of TSMC's chipmaking capacity.

Taiwan-based business newspaper Economic Daily News pointed out earlier this year that Nvidia has reportedly secured more than 70% of TSMC's advanced chip packaging capacity for 2025 in a bid to meet the robust demand for its AI GPUs. However, Nvidia is not the only company that's in line to utilize TSMC's fabs.

Apple (NASDAQ: AAPL) is another major customer, and its contribution toward TSMC's top line is expected to be identical to that of Nvidia's in 2025. The consumer electronics giant taps TSMC to manufacture the processors that go into popular devices such as iPhones and iPads, and it has reportedly pre-booked the foundry giant's 2-nanometer (nm) capacity to mass produce chips for its next-generation iPhones.

It is worth noting that Apple had reportedly booked all of TSMC's 3nm supply in 2023 to make processors for the iPhone and other devices. And now that Apple is looking to bolster the on-device AI capabilities of its devices, it is expected to move to the 2nm node so that it can pack more computing power and increase energy efficiency.

Apple, however, has company, as another smartphone chip designer -- Qualcomm -- is expected to produce chips based on TSMC's 2nm process node as well. On the other hand, Nvidia's peers in the AI accelerator market are also partnering with TSMC to manufacture advanced chips.

Marvell Technology, for instance, is reportedly going to adopt TSMC's sub-3nm process nodes to manufacture the next generation of its custom AI processors, which are in tremendous demand from cloud computing giants to reduce costs. Meanwhile, AMD is getting its central processing units (CPUs) and GPUs that power both servers and personal computers (PCs) manufactured by TSMC as well.

Clearly, TSMC is the power player in the AI chip market. Its plants manufacture chips that go into a wide variety of applications, ranging from smartphones to PCs to data centers, and all of these markets are on track to record secular growth because of AI. Importantly, TSMC is taking steps to ensure that it can meet the incredible demand from all of these markets.

An aggressive expansion plan should help it satisfy the booming AI chip demand

TSMC's 2025 capital expenditure forecast of $38 billion to $42 billion points toward a significant increase over its 2024 outlay of $30 billion. It is going to invest 70% of its 2025 capex on advanced process technologies that are used for making AI chips, which isn't surprising.

Moreover, the company has aggressive long-term expansion plans as well. It has outlined an investment of $165 billion in the U.S. to build more plants, while it is also building factories in Taiwan and Europe. These expansionary moves should enable TSMC to capitalize on the AI chip market's impressive long-term growth.

According to one estimate, the global AI chipset market could clock an annual growth rate of 31% through 2033, which means that TSMC has the ability to sustain its terrific growth for years to come. Not surprisingly, analysts are expecting a pick-up in TSMC's growth going forward.

TSM EPS Estimates for Current Fiscal Year data by YCharts

That's why it would be a good idea to buy this AI stock hand over fist right now, as it seems undervalued. TSMC's earnings are expected to jump by 34% this year, which is nearly five times the projected increase in the S&P 500 index's average earnings. With the stock trading at 28 times earnings, investors are getting a good deal on TSMC based on the potential upside it could deliver.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Marvell Technology. The Motley Fool has a disclosure policy.

Key Points

• Artificial intelligence (AI) spending could reach $4.8 trillion by 2033, and this company stands to benefit.

• It's a major AI player and still trading at an attractive valuation for long-term investors.

• 10 stocks we like better than Nvidia ›

If you're looking for massive growth potential, check out artificial intelligence (AI) stocks. According to the U.N., the AI market is set to explode from a $189 billion valuation in 2023 to nearly $5 trillion by 2033. However, despite these massive projections, one of the most popular AI stocks on the market today remains surprisingly cheap.

This popular AI stock is cheaper than you think

Looking for an AI stock that can directly benefit from a massive jump in demand over the next decade and beyond? Check out Nvidia (NASDAQ: NVDA). While many investors are already familiar with the company, you may not realize how cheap the stock actually is. Fortunes have already been made with Nvidia stock. But there's still plenty of room left to run.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Before we jump into Nvidia's surprisingly cheap valuation, let's quickly review what makes this stock so special.

Nvidia is the largest GPU stock in the world. Its hardware powers data centers worldwide -- data centers that AI developers rely on to build, train, and deploy their models. End users, too, rely on data centers to use AI services, putting Nvidia's GPUs at the center of the AI value chain. Recent estimates suggest that the company may have a market share of 90% or more for GPUs designed for AI use cases.

How did Nvidia get so dominant? According to William Blair analyst Sebastien Naji, Nvidia invested heavily to develop "the broadest ecosystem" of software tools and developers, which essentially allows it to control both the hardware and software components of its GPUs. "And so it's just so much easier to build an application, build an AI model on top of those chips," Naji adds.

Image source: Getty Images.

Nvidia got a lead on the AI GPU market through early investment. Its software focus, meanwhile, allowed users to customize their chips, creating a "stickiness" to its products. Switching to a competing chip isn't just a matter of hardware, but also software integration, providing Nvidia with a durable moat around its business model.

Nvidia's sales have grown in the heavy double digits for years. And its gross margins lead the industry. And yet, as we'll see, shares remain surprisingly cheap.

Is now the time to invest in Nvidia?

On the surface, Nvidia stock looks expensive. Shares trade at nearly 30 times sales -- a huge premium for a multitrillion-dollar stock. But on a profit basis, the situation improves dramatically.

Yes, Nvidia shares are trading at 54 times trailing earnings. But because sales are growing so quickly, it's important to look at the company's forward valuation. Based on what the company is expected to earn over the next 12 months, shares trade at just 39 times forward earnings.

Meanwhile, Intel, another chipmaker, is struggling to remain profitable. Its revenues are expected to fall by around 5% over the next fiscal year. The firm failed to invest in the AI opportunity, and the company is struggling to remain relevant in the next-gen GPU space. By comparing Intel and Nvidia on some key metrics, we can easily ascertain Nvidia's core strengths. Nvidia is positioned well for the near term and the long term. Intel's fate, meanwhile, remains uncertain for both time frames.

NVDA Revenue Growth Estimate for Current Fiscal Year data by YCharts

Compared to competitors like Intel, Nvidia is doing quite well. But is 39 times earnings actually a "bargain" valuation? It is if you keep doing the math. The AI market is expected to continue growing by 20% to 30% annually for nearly a decade. With the S&P 500 (SNPINDEX: ^GSPC) trading at 30 times earnings, it won't be long until Nvidia stock trades below the general market based on today's trading price.

The key here is patience. If you're willing to hold Nvidia stock for the long term, high sustained growth rates will quickly eat into the up-front valuation premium, making the stock a bargain in hindsight. As with any high-multiple stock, expect plenty of volatility along the way. But if you're betting on AI stocks for the long haul, Nvidia remains surprisingly cheap for patient shareholders.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,063,471!*

Now, it’s worth noting Stock Advisor’s total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 21, 2025

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Nvidia. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.

Key Points

• Nvidia stock is surging following news that it can resume chip sales to China.

• Microsoft can benefit tremendously from artificial intelligence (AI) integration across its products.

• 10 stocks we like better than Nvidia ›

Great businesses pursuing massive growth opportunities will see their share prices continuously hit new highs over the long term. This is why investors shouldn't be afraid to buy quality growth stocks at a new high. What matters is understanding the momentum in the business itself, and how long that growth can last.

Some analysts have questioned whether the best days of the "Magnificent Seven" are over, yet Nvidia (NASDAQ: NVDA) and Microsoft (NASDAQ: MSFT) continue to hit new highs following strong earnings results this year. Here's why these high-flying tech stocks are still solid buys for at least the next five years.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

1. Nvidia

Shares of Nvidia are sitting close to new highs after the company just received welcome news. Following a meeting between CEO Jensen Huang and President Donald Trump, the U.S. government will allow Nvidia to resume sales of its H20 chip in China, unlocking billions in quarterly revenue.

That said, Nvidia would have been just fine without revenue from China. Even including the China restrictions, analysts were expecting Nvidia to report $200 billion in revenue this year, for an increase of 53% over fiscal 2025 (ending in January). But resuming sales of the H20 should cause analysts to raise their near-term revenue and earnings estimates, likely sending the stock higher.

The H20 is basically a watered-down version of the company's more capable H200 data center chip. Sales to China totaled $17 billion last year, or 13% of Nvidia's revenue. The H20 generated $4.6 billion in revenue in fiscal Q1 before it had to cancel shipments due to new licensing requirements for sales to China. The $2.5 billion of revenue that Nvidia left on the table in fiscal Q1 will likely be realized in fiscal Q3, adding more upside to analysts' current $45 billion revenue estimate for fiscal Q2.

Nvidia's China business could grow significantly as a percentage of its total revenue over the next year. During the last earnings call with analysts, Nvidia CFO Colette Kress said the company had planned for $8 billion of H20 orders in fiscal Q2 before the restrictions took effect.

This just adds more fuel to the fire for Nvidia's near-term momentum. Strong demand for its Blackwell chip should benefit Nvidia's margins and earnings in the second half of the year. Current analyst estimates call for quarterly adjusted non-GAAP (generally accepted accounting principles) earnings growth to accelerate to 47% year over year in fiscal Q2, before growing 44% in fiscal Q3, and 50% in fiscal Q4. However, these estimates likely exclude additional H20 sales, since this news just broke in the last week.

While there is a lot of noise around competition with custom chipmakers, Nvidia can grow at high rates for several years. The investment in artificial intelligence (AI) infrastructure is a gigantic opportunity, large enough for multiple suppliers to do well. Nvidia is already preparing to launch the next-generation Vera Rubin chip next year, which should keep its momentum going.

Looking out to fiscal 2030, analysts expect Nvidia's revenue to grow at an annualized rate of 21%, reaching $342 billion. Earnings are expected to grow slightly faster, at 23%. This lines up with Huang's expectation that Nvidia will capture a large portion of the $1 trillion in annual data center spending projected in the next four years.

The stock could climb at similar rates as earnings, which makes Nvidia an excellent growth stock to buy and hold for the long term, even at its current price around $170 a share.

Image source: Getty Images.

2. Microsoft

Microsoft reported better-than-expected demand for AI services in its enterprise cloud business last quarter. As a leader in productivity software, Microsoft can benefit tremendously over the long term from AI integration across its products. It's for these reasons that the stock has skyrocketed to new highs since its fiscal Q3 earnings report in late April.

Microsoft Azure is the second-leading enterprise cloud provider that continues to gain share of a growing $348 billion market, according to Synergy Research. Azure revenue grew 33% year over year last quarter, but what got investors' attention was that 16 percentage points of Azure's growth was driven by AI services.

It seems every industry is embracing this revolutionary technology and doubling down on it. Microsoft sent a strong signal that the ramp in AI investment is just getting started. CEO Satya Nadella noted that the company is expanding its data center capacity, opening 10 new data centers across 10 countries.

The company's AI-powered assistant, Microsoft Copilot, has attracted hundreds of thousands of corporate customers, up three times year over year in the last quarter. It is winning bigger deals for Copilot in the enterprise market, and existing customers are returning to buy more seats for their employees.

Microsoft is even prepared for the next major advancement in cloud services with its range of software and development tools for quantum computing. The Azure Quantum platform has multiple leaders providing simulators and other tools for customers, including IonQ and Rigetti.

Microsoft's AI investments and leadership in software put it in a great position, which is reflected in analysts' growth estimates. Current estimates call for Microsoft to report $279 billion for fiscal 2025 ending in June, and that is expected to grow at an annualized rate of 13% over the next four years. Earnings should grow marginally faster, at a 15% annualized rate. This is enough growth to double the stock by 2029.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• Nvidia's AI data center chips remain the gold standard.

• Amazon and Microsoft have been significant winners in AI due to their massive cloud infrastructure operations.

• Arista Networks and Broadcom have tremendous growth ahead in AI networking.

• 10 stocks we like better than Nvidia ›

It will be a massive undertaking to build out the hardware and support necessary to power increasingly advanced artificial intelligence and provide it at a global level where billions of people can access it.

According to research by McKinsey & Company, the world's technology needs will require $6.7 trillion in data center spending by 2030. Of that, $5 trillion will be due to the rising processing power demands of artificial intelligence (AI). These investments, though, will lay the groundwork for the next era of global innovation, which will revolutionize existing industries and create new ones.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Some key companies have already been experiencing significant growth due to the AI trend, and there is still likely a long runway ahead for players in key AI infrastructure spaces, including semiconductors, cloud computing, and networking.

Here are five top stocks to buy and hold for the next wave of AI innovation.

Image source: GETTY IMAGES

Nvidia: The data center AI chip leader

Inside these colossal AI data centers are many thousands of AI accelerator chips, usually from Nvidia (NASDAQ: NVDA). The company's graphics processing units (GPUs) are the only ones that can make use of its proprietary CUDA platform, which contains an array of tools and libraries to help developers build and deploy applications that use the hardware efficiently. CUDA's effectiveness -- and its popularity with developers -- has helped Nvidia win an estimated 92% share of the data center GPU market.

The company has maintained its winning position as it progressed from its previous Hopper architecture to its current Blackwell chips, and it expects to launch its next-generation architecture, with a CPU called Vera and a GPU called Rubin, next year. Analysts expect Nvidia's revenue to grow to $200 billion this year and $251 billion in 2026.

Amazon and Microsoft: Winning in AI through the cloud

AI software is primarily trained and powered through large cloud data centers, making the leading cloud infrastructure companies vital pieces of the equation. They're also Nvidia's largest customers. Amazon (NASDAQ: AMZN) Web Services (AWS) has long been the world's leading cloud platform, with about 30% of the cloud infrastructure market today.Through the cloud, companies can access and deploy AI agents, models, and other software throughout their businesses.

AWS's sales grew by 17% year over year in Q1, and it should maintain a similar pace. Goldman Sachs estimates that AI demand will drive cloud computing sales industrywide to $2 trillion by 2030. Amazon will capture a significant portion of that, and since AWS is Amazon's primary profit center, the company's bottom line should also thrive.

It's a similar theme for Microsoft (NASDAQ: MSFT). Its Azure is the world's second-largest cloud platform, with a market share of approximately 21%. Microsoft stands out from the pack for its deep ties with millions of corporate clients. Businesses rely on Microsoft's range of hardware and software products, including its enterprise software, the Windows operating system, and productivity applications such as Outlook and Excel.

Microsoft's vast ecosystem creates sticky revenue streams and provides it with an enormous customer base to cross-sell its AI products and services to. Microsoft has also invested in OpenAI, the developer behind ChatGPT, and works with it extensively, although that relationship has become somewhat strained as OpenAI has grown increasingly successful.

Regardless, Microsoft's massive footprint across the AI and broader tech space makes it a no-brainer.

Arista Networks and Broadcom: The networking tech that underpins AI

Within data centers, huge clusters of AI chips must communicate and work together, which requires them to transfer massive amounts of data at extremely high speeds. Arista Networks (NYSE: ANET) sells high-end networking switches and software that help accomplish this. The company has already thrived in this golden age of data centers, with top clients including Microsoft and Meta Platforms, which happen to also be among the highest spenders on AI infrastructure.

Arista Networks will likely continue benefiting from growth in AI investments, as these increasingly powerful AI models consume ever-increasing amounts of data. Analysts expect Arista Networks to generate $8.4 billion in sales this year (versus $7 billion last year), then $9.9 billion next year, with nearly 19% annualized long-term earnings growth.

Tightly woven into this same theme is Broadcom (NASDAQ: AVGO), which specializes in designing semiconductors used for networking applications.

For example, Arista Networks utilizes Broadcom's Tomahawk and Jericho silicon in the networking switches it builds for data centers. Broadcom's AI-related semiconductor sales increased by 46% year-over-year in the second quarter.

Looking further out, Broadcom is becoming a more prominent role player in AI infrastructure. It has designed custom accelerator chips (XPUs) for AI model training and inference. It has struck partnerships with at least three AI customers that management believes will each deploy clusters of 1 million accelerator chips by 2027. Broadcom's red-hot AI momentum has analysts estimating the company will grow earnings by an average of 23% annually over the next three to five years.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Arista Networks, Goldman Sachs Group, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• The U.S. and China are at odds over a range of issues, including trade imbalances and AI competition.

• The Trump administration tightened AI regulations related to China this year, and that's affected many companies.

• Nvidia is among the businesses impacted by AI sales restrictions to China, but it looks positioned to continue its success despite the challenges.

• 10 stocks we like better than Nvidia ›

The U.S. government's current trade tensions with China stretch back to President Donald Trump's first term. But the situation isn't about tariffs alone. The U.S. is competing with its trading partner for supremacy in artificial intelligence. This led to new export restrictions on the sale of AI chips to China on April 9.

The updated regulations affect many tech businesses, including AI leader Nvidia (NASDAQ: NVDA). The company's sales of its popular graphics processing units (GPUs), powerful computer processors that have brought Nvidia success in the AI era, have been hurt by the federal government's export policies around such tech.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Even so, several signs suggest Nvidia can continue to thrive despite the trade conflicts between the U.S. and China. Here is a look into Nvidia's potential for ongoing success despite the hurdles.

Image source: Getty Images.

The impact of China restrictions on Nvidia

The frosty relations between the U.S. and China adversely affected Nvidia. The new export restrictions meant the company couldn't sell its AI chips earmarked for China, resulting in a $4.5 billion write-off for this unsold inventory in its fiscal first quarter, which ended April 27.

China was responsible for $5.5 billion of Nvidia's $44.1 billion in Q1 revenue. This figure could have been higher, since the company was barred from shipping an additional $2.5 billion in AI products in Q1.

Lost revenue isn't the only consequence. Nvidia CEO Jensen Huang declared, "The AI race is not just about chips. It's about which stack the world runs on. As that stack grows to include 6G and quantum, U.S. global infrastructure leadership is at stake."

In other words, strengthening American leadership in AI depends on organizations around the world building AI infrastructure with U.S. technology platforms, such as Nvidia's proprietary compute unified device architecture (CUDA) software for customizing GPUs. The current trade restrictions limit this from happening, according to Huang.

Nvidia's resilient business

These hurdles are significant, yet Nvidia demonstrated that its business remains strong in the face of such challenges. For instance, despite the loss of sales in China, its $44.1 billion in Q1 revenue represented impressive 69% year-over-year growth.

Its perseverance amid China sales setbacks is mirrored in Nvidia stock, which is up nearly 30% in 2025 through July 15, as shares hit a 52-week high of $172.40 on that date. Its soaring shares helped the company become the first to achieve a $4 trillion market cap.

Trump congratulated Nvidia on its stock's performance. Huang has visited the White House several times, and the positive relationship he has cultivated with Trump gives Nvidia an edge amid trade pressures.

In fact, the company recently announced plans to resume selling its AI chips to China, stating, "The U.S. government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon."

Factors in Nvidia's favor

Huang noted Nvidia's tenacity amid trade tensions, asserting, "Every single year there were rules and taxes and tariffs and policies and regulations, and we survived... and whatever it turns out to be, we'll make the best of it."

The company's confidence in its future is illustrated in its fiscal Q2 outlook, which estimates $45 billion in revenue. This is a strong increase from the $30 billion made in the previous year.

Nvidia's success to date is poised to continue even if its sales to China remain tepid. The U.S. is its largest source of revenue, contributing $20.7 billion of Q1's $44.1 billion.

Moreover, the company's current AI platform, Blackwell, will soon make way for next-generation technology, Vera Rubin, due out in 2026. Vera Rubin is a superchip designed to transform how AI is integrated into supercomputers.

Many organizations are rushing to build data centers for their AI systems with Nvidia's products. For example, European manufacturers are building an AI facility focused on boosting industrial manufacturing. This installation will require 10,000 Nvidia GPUs. And Facebook parent Meta Platforms is constructing several data centers reportedly using over 1 million Nvidia GPUs.

This kind of hunger for Nvidia's AI products will continue to fuel the company's success for years to come. After all, industry forecasts estimate the AI market will expand from $244 billion in 2025 to $1 trillion by 2031.

Although the extent to which its China business eventually recovers is uncertain, Nvidia is poised to remain a key AI player on the global stage, thanks to innovations such as CUDA and Vera Rubin.

Its stock's price-to-earnings (P/E) ratio of 55 is getting up there but is still significantly lower than major rival Advanced Micro Devices's 114. With many factors propelling Nvidia's business growth, its stock looks like a great long-term investment.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Robert Izquierdo has positions in Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.

Key Points

• Tepper originally bought shares of the two biggest GPU makers in 2023: Nvidia and AMD.

• As GPUs face growing competition in data centers, he is shifting to a different chipmaker.

• Broadcom is a more diversified tech giant, giving its business more downside protection.

• 10 stocks we like better than Broadcom ›

David Tepper is one of the most successful investment managers on Wall Street. His Appaloosa Management hedge fund has produced gross annualized returns of more than 28% since its inception in 1993. That far outpaces the S&P 500's annualized return over the last 32-plus years of about 10.6%.

Tepper is best known for buying distressed debt from companies close to bankruptcy. In fact, Appaloosa was considered a junk bond investment boutique in the 1990s. That contrarian approach often extends to his stock portfolio as well.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

That said, he's not so set on swimming against the current that he won't buy stocks that are part of an obvious trend like artificial intelligence (AI). AI stocks like Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) have soared in value over the last few years. And Tepper made quite a bit of money on those stocks.

But he's been selling them recently in favor of another AI chipmaker instead, possibly taking a bit of a contrarian stance against the two big GPU makers.

Image source: Getty Images.

The essential infrastructure behind the AI revolution

Graphics processing units (GPUs) are computer chips or systems that have proven exceptionally adept at crunching all the data that goes into training and running large language models. GPUs are designed to do the types of calculations needed for training AI algorithms, and they can run the processes in parallel, making them far more efficient than a standard CPU, which uses serial processing.

Nvidia has long been a leader in GPUs, dating back to the days when they were mostly just used for high-end visuals in gaming (hence why the G stands for "graphics"). As the processing needs of large language models grew exponentially larger, it's seen incredible demand for its leading GPU systems.

Even after the strong growth in 2023 and 2024, Nvidia's data center revenue climbed another 73% year over year last quarter. With strong operating leverage, the company has seen its earnings zoom higher, and investors have rewarded it. It's now the most valuable company in the world by a substantial margin, worth over $4 trillion.

But AMD is starting to make progress in catching up to Nvidia. The company's MI400 chips coming next year could offer better price performance than Nvidia's current Blackwell line of chips. While Nvidia will be on to its next-generation Vera Rubin platform by then, AMD is offering Nvidia's biggest customers a viable alternative, which could keep its pricing from climbing substantially higher.

AMD's stock hasn't performed nearly as well as Nvidia's. After peaking in early 2024, the stock crashed more than 60% to its low in April this year. The first quarter could have been a great opportunity to buy the stock, especially for a contrarian investor looking to take a stance against Nvidia's continued dominance.

But Tepper sold his entire stake in AMD during the first quarter, a position first established in the second quarter of 2023. He also continued to cut his Nvidia stake, leaving him with just 3% of the shares he held for Appaloosa in mid-2023. Instead, he's betting on a different chipmaker that poses an increasing threat to the dominance of GPUs in AI data centers.

The AI chipmaker Tepper's buying instead

While GPUs are extremely flexible and capable of handling all sorts of tasks, many of the biggest companies developing leading-edge AI capabilities are working on custom-made silicon that can handle specific tasks far more efficiently than power-hungry GPUs. These application-specific integrated circuits, or ASICs, represent a significant threat to GPUs, as hyperscalers like Meta Platforms and Alphabet's Google design more advanced chips capable of handling AI training and inference.

The capabilities of ASICs are expanding. Meta says its custom chips, which have historically handled machine learning AI, are expanding to training large language models after starting with machine learning algorithms and moving on to AI inference. Google trained its large language model Gemini on its own chip designs, and it just released its first Tensor Processing Unit (TPU) designed for AI inference in April.

The company helping Meta and Google design their ASICs is Broadcom (NASDAQ: AVGO). On top of that ASIC business, Broadcom is also the leading networking chipmaker. Networking is an essential piece of AI data centers, as solid network performance ensures all the data gets to the expensive GPUs or ASICs quickly and efficiently. These businesses are spending billions on those chips, so they don't want them sitting idly any longer than necessary.

Broadcom also has an enterprise software business, led by virtual machine software VMWare.

That is to say, Broadcom offers a more diversified chipmaker compared to Nvidia or even AMD (which also has a strong CPU business). That may be why Tepper took a small stake in the company during the first quarter, as it's a leading competitor in AI chips while offering some downside protection with its VMWare business.

Still, Broadcom stock is expensive. It trades for a forward earnings multiple close to 40. That's right in line with Nvidia and slightly less expensive than AMD. The company arguably holds more upside if ASIC designs capture more real estate in data centers over time. Consider the potential efficiency gains of ASICs versus GPUs, which seems likely to happen in the long run.

But investors may have to settle for more slow and steady growth compared to Nvidia or AMD. As such, it's worth keeping an eye on Broadcom's stock to see if it falls back down to a more attractive price before following Tepper into the stock.

Should you invest $1,000 in Broadcom right now?

Before you buy stock in Broadcom, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Broadcom wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Levy has positions in Alphabet and Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms, and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

Key Points

• It's now possible to trade certain stocks on Solana's blockchain.

• That capability is attracting a lot of capital, and very quickly.

• You don't necessarily want to be investing in these tokenized assets just yet.

• 10 stocks we like better than Solana ›

Wall Street's market closes at 4 p.m. eastern time, but blockchains are open all night long. Thanks in part due to that after‑hours void, a tiny slice of the stock market has quietly migrated onto Solana (CRYPTO: SOL), turning a small but growing selection of stocks into tokens that trade 24/7.

Between mid‑June and July 4, Solana's on‑chain value of those tokenized stocks more than tripled, from about $13 million to $48 million, a jump powered almost entirely by a new platform called xStocks. By July 16, the chain featured more than $100 million worth of stocks, indicating that the pace of growth is still incredible.

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The quantity of dollars involved here might look trivial, but the growth rate is anything but. Let's dig into why this is happening, and what it could mean for long‑term investors in Solana and other cryptocurrencies.

Stock tokenization just went white-hot

The xStocks platform went live on June 30 with more than 60 U.S. tickers set up. This included companies you might own, like Microsoft, Tesla, Nvidia, Amazon, Meta Platforms, and more, all minted as a Solana token and tradable on major crypto exchanges like Kraken, Bybit, and several decentralized exchanges (DEXes) too.

Those tokens are said to be backed 1‑for‑1 by shares of the underlying stocks. Transactions settle in seconds, and they can move peer‑to‑peer at sub‑penny network fees. They can also be traded at any hour of the day or night, which is an experience most brokerage apps simply cannot match.

Speed and novelty explain part of the surge, but the quality of the technology enabling the move matters too.

Image source: Getty Images.

Solana's cheap and fast transactions make sending fractional shares around the network highly economical, which in turn invites small investors, and also the development of relatively small-time decentralized finance (DeFi) applications that cater to that same group. The launch also coincided with the launch of so‑called "tax coins," an emerging segment of tokens that skim a trading levy and automatically funnel the proceeds into xStocks to distribute to holders as on‑chain dividends. Further DeFi innovation involving tokenized assets like stocks is all but guaranteed, and at the moment, Solana is where it all happens.

But before you rush in and buy tokenized stocks on Solana, be aware that there is a substantial amount of fine print here.

Liquidity is razor‑thin on tokenized stocks in a way that most investors never need to think about normally. Many xStocks trade only a few thousand dollars a day, so the risk of your purchases or sales failing due to insufficient liquidity is significant in some cases.

Furthermore, most tokenized stocks still fall under securities laws, no matter what wrapper they wear. If there are issues with regulators, platforms could be forced to delist assets or exclude U.S. users overnight, and that might make the tokenized stocks worthless or untradeable.

What this means for holders

Tokenized stocks are only one strand of Solana's real‑world asset (RWA) push, but they arrive as the chain is already outpacing rivals.

Total RWA value on Solana, which includes everything from U.S. Treasuries to funds, has surged 140% this year to reach roughly $564 million as of mid-July. If that trend holds, Solana could capture a meaningful share of the trillions in assets that consultants expect to go on‑chain by 2030. For reference, Boston Consulting Group (BCG) pegs the total addressable market for tokenized illiquid assets at about $16 trillion within five years.

For holders, the mechanics of how to benefit from this trend are very straightforward. Every stock transfer or dividend a smart contract triggers in turn burns a smidge of the coin in fees, tightening supply. It also implies that users and investors had to hold some of the coin to pay the fees. In theory, a booming stock token venue could replicate what meme coins did for Solana's fee revenue last winter, but with Wall Street credibility attached.

Investors intrigued by this development should consider two things.

First, as far as the tokenized stocks themselves go, you don't need to rush to buy them. If you're the average investor, you probably shouldn't be buying them at all for at least a few more quarters to let the open issues get settled. Just buy the stocks on the traditional equity market as you usually do, assuming you want to hold them at all.

Second, if you believe public stocks will migrate on‑chain in size and that Solana's speed will keep it competitive, buying and holding the coin for the long haul will give you exposure to the upside from that trend.

In short, the explosion of stock tokenization on the chain is quite bullish, and it's ensuring that Solana's long-term picture keeps looking better and better.

Should you invest $1,000 in Solana right now?

Before you buy stock in Solana, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Solana wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Alex Carchidi has positions in Amazon, Meta Platforms, Nvidia, Solana, and Tesla. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Microsoft, Nvidia, Solana, and Tesla. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• Data center growth is slated to continue for some time.

• Nvidia's GPUs are unrivaled in the AI space.

• Many stocks trade at the same price tag as Nvidia with far less growth.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) has been the top artificial intelligence (AI) stock to own for some time now, but with its latest rise, many investors are concerned that Nvidia's stock is too expensive to buy more shares at the current price. While I understand the hesitation, I think there is a compelling argument that Nvidia isn't expensive when you take a longer view than just a single year.

If you can commit to owning Nvidia stock for three to five years, I think there's a good reason to buy the stock right now. However, if you're only looking at a single year, the stock may appear somewhat pricey.

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Image source: Getty Images.

Data center expansion will continue to be a massive source of growth

Nvidia is the global leader in graphics processing units (GPUs), and it has established this position through superior hardware and unmatched software that allow users to optimize GPUs for various workloads. One estimate pegs Nvidia's data center market share for GPUs at 90%, which underscores just how widely used Nvidia's products are.

GPUs aren't just popular for AI workloads; they're used whenever an arduous computing task is involved. Whether it's drug discovery, cryptocurrency mining, engineering simulations, or their original purpose, gaming graphics, GPUs excel at the task because of their ability to process multiple calculations in parallel. Combine that with the ability to connect GPUs in clusters, and their computing power can be quickly amplified.

As more data centers are built, the demand for GPUs is expected to rise, which will likely benefit Nvidia's stock over the long term. For 2025, the AI hyperscalers all announced record capital expenditures, with most of the funds going toward data center construction. While this is impressive, the records are likely to be shattered again in 2026, as data center construction spans multiple years. This supports a third-party projection that Nvidia cited during its 2025 GTC conference, stating that 2024 global data center capital expenditures totaled $400 billion but are expected to rise to $1 trillion by 2028.

Should that occur, Nvidia's stock has plenty of room to run, as it captures a large portion of that spending. In the company's fiscal-year 2025 (which encompasses most of 2024), its data center revenue totaled $115 billion, which means Nvidia captures nearly 30% of total data center spending. If it can maintain that market share, it has the potential to generate $300 billion from data centers alone, provided the projection comes true.

That's a significant upside from today's totals, making today's stock price appear less expensive than it initially seems.

Nvidia's stock appears expensive, but so do many others in the market

Currently, Nvidia's stock trades at about 40 times forward earnings.

NVDA PE Ratio (Forward) data by YCharts

That's historically quite expensive, but few companies have been able to sustainably grow as quickly as Nvidia. For Q2, Nvidia expects 50% revenue growth, which is far more than the majority of companies in the market.

Furthermore, if you're going to call Nvidia expensive, then there are countless other stocks investors must be cautious with. Stocks like Amazon (NASDAQ: AMZN) (36 times forward earnings), Eli Lilly (NYSE: LLY) (35 times forward earnings), and Costco Wholesale (NASDAQ: COST) (53 times forward earnings) are just as expensive as Nvidia, yet don't have near the growth rate or upside.

NVDA PE Ratio (Forward) data by YCharts

I think it's safe to say that the broader market is rather expensive as a whole, but with how rapidly Nvidia is growing and how bright its long-term prospects are, I think investors are still safe to pick up shares here, as long as they have the mindset that they're holding for three to five years. If you can keep that time frame in mind, Nvidia is still a compelling investment.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Nvidia. The Motley Fool has a disclosure policy.

Key Points

• Nvidia has seen its stock soar thanks to incredible demand for its high-end GPUs.

• Nvidia faces challenges from other GPU makers and custom silicon projects from its biggest customers.

• This company is an AI leader on two fronts and trades at a reasonable valuation.

• 10 stocks we like better than Nvidia ›

Nvidia (NASDAQ: NVDA) has skyrocketed in value over the last three years to become the world's first $4 trillion company. The 10x-plus increase in value from three years ago was fueled by the massive spending on artificial intelligence (AI) infrastructure, of which Nvidia's graphics processing units (GPUs) are a key component.

Nvidia's dominance of the AI chip market faces some challenges, though. Competing GPU makers are catching up in price performance, and Nvidia's biggest hyperscale customers are leaning more on their custom silicon designs for generative artificial intelligence (AI) applications. That could weigh on its continued growth.

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Meanwhile, another AI giant could quickly follow Nvidia into the $4 trillion club and climb to $4.5 trillion within a year, according to analysts at Oppenheimer. And right now, the stock looks even more attractive than Nvidia.

Image source: Getty Images.

Can Nvidia remain the most valuable company in the world?

Nvidia has established itself as the clear leader in developing chips for AI training. Its competitive position is bolstered not just by maintaining more advanced technological capabilities than its next-closest competitor, though. It also leans on its proprietary software, CUDA, making it unlikely another chipmaker can supplant its position.

That said, some of Nvidia's biggest customers, like Meta Platforms (NASDAQ: META) and Microsoft (NASDAQ: MSFT), are wary of becoming overly reliant on Nvidia for their AI training hardware needs. Meta, for example, is taking its Meta Training and Inference Accelerator platform and applying it to more and more generative AI applications. The next version of its chip is designed to replace Nvidia chips in AI training for its Llama foundation model. It's already using its own chips in some AI inference cases.

Microsoft has similar aspirations for its Maia chips, but recently pushed back the timeline for its next-generation AI training chip to 2026 instead of this year. These types of setbacks have hit other hyperscalers in the past, including Meta, resulting in them putting in massive orders with Nvidia. However, as the big tech companies improve their design processes, they could displace a large portion of their demand for Nvidia's chips over time.

For now, Nvidia's position looks well protected. That's especially true after news that the U.S. will reverse its ban on the sale of the throttled-down H20 chips in China. Nvidia wrote down $4.5 billion in inventory last quarter after the policy went in place. As a result, the company should produce strong earnings growth through the rest of the year, fueled by China and the hyperscalers.

Still, the stock trades for a premium, approaching 40 times forward earnings estimates. At its current price and long-term hurdles, it might not be able to keep climbing as fast as some of the other big AI companies.

The one company that could soon take Nvidia's crown

Few companies even come close to the size of Nvidia at this point. There are just 10 companies with a market cap exceeding $1 trillion as of this writing, and just three of them are worth $3 trillion or more, including Nvidia itself.

But Microsoft is the next-closest to Nvidia at about $3.8 trillion as of this writing, and it could join the $4 trillion in the near future, according to analysts at Oppenheimer. They put a $600 price target on the stock, implying a market cap of about $4.5 trillion and 19% upside from its price as of July 15.

There are a couple of reasons Oppenheimer's analysts are bullish. First, they see acceleration in Microsoft's Azure cloud computing revenue. Azure has become the growth engine at Microsoft, fueled by demand for compute power needed for AI development. Microsoft's stake in OpenAI not only gives it a huge customer for Azure, but it also brings key tools for other AI developers.

That's fueled significant growth in demand. And despite spending $80 billion on capital expenditures, mostly going toward building and outfitting new data centers, Microsoft's management says demand continues to outstrip supply. Even so, Azure is growing faster than any of the three big public cloud platforms.

The other reason the analysts are bullish on Microsoft is the potential of its Copilot Studio. While they note demand for Microsoft's native AI assistant Copilot for Microsoft 365 is relatively tepid, the demand for its custom AI assistant platform Copilot Studio could produce much better results. That enables Microsoft to increase prices for its enterprise software suite while increasing retention rates. That should produce even more cash for the company to plow back into Azure and its massive capital return program, fueling earnings-per-share growth through higher earnings spread across fewer shares.

Shares of Microsoft have grown relatively expensive in their own right, with the stock trading for about 33 times forward earnings. But that's a reasonable multiple to pay for the stock of a company that's leading the AI industry on two fronts with its cloud computing and enterprise software businesses.

It's worth noting that Oppenheimer analysts updated their price target for Nvidia following the news that Nvidia expects the U.S. to reverse its ban on exporting chips to China. They now expect it to reach $200 per share, implying a market cap of $4.9 trillion. But for my money, I think Microsoft is the more attractive investment at the current price.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Levy has positions in Meta Platforms and Microsoft. The Motley Fool has positions in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• Alphabet is playing to win in the quantum computing space.

• Microsoft believes it will build a scalable quantum supercomputer within "years, not decades."

• Nvidia is investing heavily in quantum computing and has an all-star lineup of partners.

• 10 stocks we like better than Alphabet ›

Some things come in pairs. Chopsticks, gloves, salt and pepper, socks, and cartoon characters Tom and Jerry come to mind. Unfortunately, so does investing in quantum computing stocks and a high level of risk.

While quantum computing is highly promising, it's still a largely unproven technology. Several of the small, high-flying quantum computing stocks on the market could become even bigger winners over the next several years -- or they could go bust.

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Want to invest in quantum computing without the crazy risk? Buy these three stocks.

Image source: Getty Images.

1. Alphabet

Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google Quantum AI (artificial intelligence) has achieved two major quantum computing milestones in recent years. In 2019, its quantum technology solved a problem in 200 seconds that the company said would have taken the world's fastest supercomputer 10,000 years to handle. In 2023, Google Quantum AI made a big breakthrough in quantum error correction.

Make no mistake about it: Alphabet is playing to win in the quantum computing space. But unlike the smaller quantum computing companies, the Google parent is already highly profitable (raking in over $100 billion in earnings last year). Alphabet is also sitting on a cash stockpile of $95 billion, enough to gobble up all the smaller rivals if it wanted to.

Alphabet isn't generating much money from its quantum computing efforts yet. The company's cash cow is still its advertising business, led by Google Search and YouTube. Google Cloud is also the fastest-growing member of the top-tier cloud providers.

Granted, buying Alphabet comes with some risk. Google is appealing two major antitrust lawsuits, and generative AI could eventually threaten the company's search engine dominance. However, these risks aren't as great as those of some quantum computing companies. I think Alphabet will continue to be a big winner for investors over the long run.

2. Microsoft

Like Alphabet's Google Quantum AI, Microsoft (NASDAQ: MSFT) has accomplished two big milestones on its quantum computing roadmap. In May 2023, it announced a breakthrough that enables the creation of a new type of qubit (the quantum bit that's the basic unit of information in quantum computing). Earlier this year, Microsoft introduced Marjorana 1, a quantum chip that uses the world's first topoconductor (a material that helps create more scalable qubits).

Microsoft's goal is to build a scalable quantum supercomputer in "years, not decades." The company claims that it's "leading the industry with advanced technology that accelerates scientific discovery." For some businesses, those statements might be dismissed as mere hype. But with Microsoft, which made $270 billion in sales over the last 12 months, I wouldn't be so skeptical.

Few companies are as heavily invested in as many high-growth areas as Microsoft. In addition to quantum computing, Microsoft is a leader in artificial intelligence (AI), cloud services, cybersecurity, and augmented reality/virtual reality.

Investing in Microsoft isn't risk-free. The company could stumble, and/or the stock's valuation (shares trade at 33.4 times forward earnings) could become problematic. But the risks associated with this tech titan are trivial compared to those of a business that's burning through cash.

3. Nvidia

Nvidia (NASDAQ: NVDA) CEO Jensen Huang sparked a sell-off of quantum computing stocks early this year after stating that quantum computing won't be "very useful" for at least another 15 years. He later backtracked on those comments.

The reality is that Huang's company is investing heavily in quantum computing. Nvidia is building an accelerated quantum research center in Boston. It has also developed CUDA-QX, a collection of libraries and tools to help quantum researchers use Nvidia graphics processing units (GPUs) to accelerate their applications. And the company is partnering with many of the world's leading quantum computing pioneers.

Does Nvidia's success hinge on quantum computing fulfilling its potential? Not at all. AI should provide a sufficiently strong tailwind to keep Nvidia's revenue and profits growing for a long time to come.

Sure, Nvidia faces some challenges. Rivals and even customers have developed their own AI chips. Chinese tech company DeepSeek has also raised concerns that the underlying technology of AI models could require significantly fewer GPUs, potentially threatening Nvidia's growth. However, Nvidia's chances of delivering market-beating returns over the next decade still look pretty good, in my view.

Should you invest $1,000 in Alphabet right now?

Before you buy stock in Alphabet, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,056,790!*

Now, it’s worth noting Stock Advisor’s total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet and Microsoft. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• TSMC reported strong revenue and earnings growth, although currency was a headwind.

• Demand for AI chips is booming, which is pushing up demand for TSMC's leading nodes.

• The company expects strong sequential growth in the third quarter.

• 10 stocks we like better than Taiwan Semiconductor Manufacturing ›

Here's our initial take on Taiwan Semiconductor Manufacturing's (NYSE: TSM) fiscal 2025 second-quarter financial report.

Key Metrics

TSMC Noted Strong Demand for Leading Nodes

TSMC, as it is better known, missed analyst expectations for revenue in the second quarter, but currency exchange rate fluctuations were mostly to blame. Revenue still soared 44% in U.S. dollars thanks to soaring demand for the company's most advanced 3nm and 5nm node semiconductor chips. TSMC's 3nm nodes accounted for 24% of total revenue, while the 5nm nodes accounted for 36% of revenue.

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High-performance computing, which includes AI-related chips, accounted for 60% of revenue, up from 52% in the second quarter of last year. HPC revenue rose by 14% from the first quarter as AI infrastructure spending ramps up around the world.

The ongoing shift toward TSMC's more advanced nodes benefited the company's profitability. Gross margin jumped more than 5 percentage points year over year to 58.6%, operating margin rose more than 7 percentage points to 49.6%, and net profit margin jumped nearly 6 percentage points to 42.7%. The company spent $9.63 billion on capital expenditures during the second quarter to support its growth, bringing the year-to-date total to $19.69 billion.

For the third quarter of fiscal 2025, TSMC expects to generate revenue between $31.8 billion and $33 billion, a gross margin between 55.5% and 57.5%, and an operating margin between 45.5% and 47.5%.

Immediate Market Reaction

Shares of TSMC were up around 4% by noon on Thursday. Strong revenue growth, thanks to soaring demand for AI chips, along with even stronger earnings growth, was enough to push up the stock.

What to Watch

TSMC has a stranglehold on the leading-node portion of the foundry market, making it the only game in town for AI chip designers like Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD). With total planned AI infrastructure investments exploding, TSMC's advanced nodes will remain in high demand for the foreseeable future.

While AI is a tailwind, macroeconomic uncertainty could eventually hurt demand for other types of chips.

Helpful Resources

• Full earnings report
• Investor relations page
• Additional coverage

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $674,281!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,050,415!*

Now, it’s worth noting Stock Advisor’s total average return is 1,058% — a market-crushing outperformance compared to 179% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of July 15, 2025

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Key Points

• Community Trust sold 13,371 Microsoft shares worth $5.79 million.

• This trade represented 0.34% of Community Trust's 13F reportable AUM as of Q2.

• The investment firm now holds 224,197 shares, valued at $111.52 million.

• Microsoft remains the fund’s largest position after the trade.

• These 10 stocks could mint the next wave of millionaires ›

On July 10, 2025, Community Trust & Investment Co reported selling shares of Microsoft (NASDAQ:MSFT), reducing its position by $5.79 million in the latest SEC filing.

What happened

According to a filing with the Securities and Exchange Commission dated July 10, 2025, The firm sold 13,371 shares of Microsoft during Q2 2025. The reported transaction totaled $5.79 million. After the trade, the fund held 224,197 shares as of June 30, 2025, with a position value of $111.52 million as of June 30, 2025.

What else to know

The sale reduced Microsoft’s portfolio weight to 6.45% of 13F reportable AUM as of June 30, 2025

Top holdings after the filing:

MSFT: $223,035,672 (12.90% of AUM)

GOOGL: $216,864,286 (12.54% of AUM)

NVDA: $214,820,910 (12.42% of AUM)

CTBI: $209,470,000 (12.10% of AUM) as of Q2 2025

AAPL: $157,356,788 (9.10% of AUM)

Microsoft shares closed at $501.48 on July 10, 2025, up 9.13% over the year ending July 10, 2025

One-year alpha versus the S&P 500: (3.49) percentage points as of July 10, 2025

Dividend yield 0.65%; forward P/E ratio of 37.44 as of July 10, 2025

Company overview

Company snapshot

Offers a diversified portfolio including software (Windows, Office, Azure), cloud services, business solutions, gaming (Xbox), and hardware devices.

Generates revenue through software licensing, cloud subscriptions, enterprise services, device sales, and advertising.

Serves organizations, enterprises, and individual consumers globally.

Microsoft Corporation is a global leader in technology, operating at scale across cloud infrastructure, productivity software, and digital platforms. The company leverages a broad product suite and recurring revenue streams to maintain a strong competitive position. A strategic focus on cloud computing and enterprise solutions underpins its sustained growth.

Foolish take

Microsoft is a giant in tech and with its early backing of OpenAI, a leader in artificial intelligence. The company has seen double-digit growth in both revenue and net income for the past five quarters (with Q2 2024 as the sole exception at 9.7% net income growth), largely driven by its cloud computing segment, which grew 22% last quarter.

With a strong financial standing, Microsoft is heavily investing in AI-related cloud infrastructure, projecting approximately $80 billion in spending for 2025.

However, investors should be aware of risks, primarily the strain in Microsoft's relationship with OpenAI and its reliance on it for the lion's share of its cloud revenue growth. There's a possibility OpenAI could switch cloud providers and leave Microsoft hanging out to dry.

Microsoft stock currently trades at a P/E ratio of 38, higher than its 20-year average. While it's a solid addition to a diversified portfolio, I think there are better opportunities within big tech.

Glossary

13F reportable assets under management (AUM): The value of securities an institutional investment manager must report quarterly to the SEC on Form 13F.
Portfolio weight: The percentage of a fund’s total assets allocated to a specific investment or holding.
Alpha: A measure of an investment’s performance compared to a benchmark, showing value added or subtracted by active management.
Dividend yield: Annual dividends paid by a company divided by its share price, expressed as a percentage.
Forward P/E ratio: Price-to-earnings ratio using forecasted earnings over the next 12 months, indicating expected valuation.
Transaction value: The total dollar amount generated from buying or selling a security in a single trade.
Cloud services: On-demand computing resources and software delivered over the internet, often by subscription.
Filing with the Securities and Exchange Commission: Submission of required financial or ownership documents to the SEC for regulatory compliance.
Top holdings: The largest investments in a fund’s portfolio, ranked by value or percentage of assets.
TTM (Trailing Twelve Months): Financial data covering the most recent 12 consecutive months, used for analysis.

Where to invest $1,000 right now

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*Stock Advisor returns as of July 14, 2025

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Key Points

• Wolfspeed stock jumped in a daily session that saw big positive momentum for semiconductor stocks.

• The silicon-carbide specialist's volatile stock may have gotten a boost from some big news regarding Nvidia, but its outlook is risky for investors.

• Wolfspeed is going through a bankruptcy and restructuring process, and investors should be very careful with the stock right now.

• 10 stocks we like better than Wolfspeed ›

Wolfspeed (NYSE: WOLF) stock posted substantial gains in Tuesday's trading. There wasn't any new, business-specific news pushing the silicon-carbide specialist's valuation higher, but its share price gained 8.4% today thanks to speculative momentum, chip industry news, and investors gambling on the company's bankruptcy proceedings. The stock had been up as much as 22.9% early in the day's trading.

Wolfspeed announced at the end of June that it had submitted filings for restructuring under a Chapter 11 bankruptcy. Despite a very risky outlook for the company's stock, its share price is up 273% since its bankruptcy announcement.

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Image source: Getty Images.

Is Wolfspeed stock a buy?

Wolfspeed stock has been incredibly volatile in recent trading, and it's been prone to large moves on little or no business-specific news. Tech stocks saw bullish momentum today after Nvidia announced that it had received assurances that the U.S. government would greenlight licensing approval needed to sell the company's H20 processors in China. Gains for Nvidia and other AI chip stocks following news about licensing approval for the H20 processors don't suggest any meaningful shift in Wolfspeed's prospects as an investment.

Wolfspeed is a company that's in the early stages of moving through bankruptcy proceedings. Companies that are starting bankruptcy procedures can sometimes see huge valuation moves even in the absence of relevant developments, but the likely outcome is generally unfavorable for investors trying to make ultra-short-term plays at this stage.

Wolfspeed's bankruptcy and restructuring makes it likely that the stock will be delisted from the New York Stock Exchange, and investors who hold on to shares through the restructuring process will receive only between 3% and 5% of the value of the new company. With these risks in mind, Wolfspeed stock is too shaky to be a good investment right now.

Should you invest $1,000 in Wolfspeed right now?

Before you buy stock in Wolfspeed, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Wolfspeed wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $680,559!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,005,670!*

Now, it’s worth noting Stock Advisor’s total average return is 1,053% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of July 15, 2025

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Wolfspeed. The Motley Fool has a disclosure policy.

Key Points

• Nvidia announced it should be able to resume shipping its H20 chips to China soon.

• The move bolstered the stocks of virtually all Chinese AI companies.

• Alibaba's latest Qwen models have been shooting up the open-source model ranks.

• 10 stocks we like better than Alibaba Group ›

Shares of Chinese tech giant Alibaba (NYSE: BABA) rallied 8.1% on Tuesday.

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Alibaba is not only a leader in e-commerce and digital payments but also an artificial intelligence (AI) leader in China. Its open-source model Qwen is thought to be among the best open-source models out there, ranking close to or above the latest DeepSeek on independent scoring boards such as Live Bench.

Therefore, Alibaba rose today after AI chip giant Nvidia (NASDAQ: NVDA) suggested it would be able to recommence shipping its H20 AI chips to China once again after an April ban.

Nvidia assured investors it has assurances from the White House

Late on Monday, Nvidia wrote on its company blog that "NVIDIA is filing applications to sell the NVIDIA H20 GPU again. The U.S. government has assured NVIDIA that licenses will be granted, and NVIDIA hopes to start deliveries soon."

In April, Nvidia was forced to stop shipments of its H20, which is a modified version of its Hopper AI chips to fit the Chinese market, and to apply for a license. Whether that halt had to do with the administration's negotiations with China over trade policy or not is unclear. After all, those trade negotiations are still ongoing.

Nevetheless, Nvidia's announcement boosted virtually all Chinese AI companies. Alibaba certainly fits that mold, with its Qwen open-source model being one of the best-performing models in China. Last month, Qwen's latest model leapt to the top of the Hugging Face leaderboard as the highest-performing open-source model today.

In addition to Qwen, Alibaba has also invested in an AI start-up named Moonshot. Moonshot just released its Kimi K2 AI model, which Kimi management claims tops the best ChatGPT models from OpenAI and Anthropic's Claude models in the specific task of software coding and at a fraction of the cost.

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Alibaba should rank among the top of China's AI companies

It remains to be seen how China's AI companies will be able to compete against their U.S. counterparts, but that may not matter much in the case of Alibaba's stock, which revolves around its core China e-commerce business. As long as Alibaba has access to top AI chips and talent versus its competitors, it should be able to translate that into revenue and profit growth across its business empire spanning e-commerce, cloud, and digital finance.

Should you invest $1,000 in Alibaba Group right now?

Before you buy stock in Alibaba Group, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alibaba Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $680,559!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,005,670!*

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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy.

Nvidia (NASDAQ: NVDA) shares surged 4% to close at $170.70 on Tuesday, outpacing broader market indices as investors responded positively to news about graphics processing unit (GPU) exports to China resuming. The chipmaker received assurances from the Trump administration that it can once again export its H20 GPU to the Chinese market.

While Nvidia rallied, major indices showed mixed performance. The S&P 500 fell slightly, dropping 0.4%, while the Nasdaq Composite remained relatively flat with its 0.18% gain, highlighting Nvidia's strong individual performance against market headwinds. Among competitors, Advanced Micro Devices (NASDAQ: AMD) showed even stronger performance, jumping 6.4% to $155.61, while Intel (NASDAQ: INTC) declined 1.63% to $22.92, highlighting the diverging fortunes within the semiconductor sector.

Nvidia's trading volume reached approximately 229 million shares, below its 200-day average of approximately 253 million shares, according to Barchart data. Technically, the stock has established positive momentum by reclaiming its 200-day moving average of around $131.40, with the shares now trading nearly 30% above this key technical indicator.

The company's renewed access to the crucial Chinese market, combined with ongoing sector rotation into artificial intelligence (AI) infrastructure investments, appears to be solidifying Nvidia's position as the premier semiconductor manufacturer in the rapidly expanding AI space.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $680,559!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,005,670!*

Now, it’s worth noting Stock Advisor’s total average return is 1,053% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of July 15, 2025

JesterAI is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. All articles published by JesterAI are reviewed by our editorial team, and The Motley Fool takes ultimate responsibility for the content of this article. JesterAI cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Intel, and Nvidia. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.