Key Points
Taiwan Semiconductor is the go-to manufacturer of advanced AI chips, making it crucial to the tech world.
Alphabet operates in multiple stages of the AI pipeline, and that includes contributing important research.
Looking back at the past few years in the investing and business world, there hasn't been a topic as discussed as artificial intelligence (AI). Since the explosion in popularity of generative AI apps like ChatGPT and Gemini, many companies have shifted their focus to integrating AI into their businesses.
With the focus on AI has come investors rushing to put money into AI stocks, hoping to take advantage of the newfound growth opportunities. If you have $3,000 available to invest and want to get in on the AI boom, the following two stocks are great options to buy and hold for the long haul.
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1. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (NYSE: TSM) may not be the first name that comes to mind when you think about AI companies, but it has a pivotal role in the AI ecosystem that makes it worthy of the title. TSMC, as the company is also known, is the world's leading semiconductor (chip) company.
It manufactures the chips for many of the world's largest tech companies, including Apple, Nvidia, Tesla, Advanced Micro Devices, and plenty of others. TSMC uses a foundry model, where instead of manufacturing chips that companies can buy in stores or online, they come to TSMC with their specific chip designs, and then it uses its manufacturing power to bring these to life.
TSMC's main role in the AI ecosystem comes down to the graphics processing units (GPUs) that it manufactures for companies like Nvidia and AMD. These GPUs are a crucial part of AI because they power the data centers that make training and scaling AI at the level it is today possible.
Regarding process, efficiency, and scale, no other company compares to TSMC's ability. That's largely why its market share in advanced AI chip manufacturing is well above 90 percent. TSMC is the go-to for AI chips, and without it, you can bet that the AI supply chain would take a major step back.
This reliance on TSMC has also paid off for the company's financials. In the second quarter, it increased its revenue by 44% year over year to $30 billion, and its high-power computing (HPC) segment -- which includes AI chips -- accounted for 60% of that. TSMC's role in the tech world makes it a stock you can comfortably hold for the long term.
2. Alphabet
Google's parent company, Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), has also been a key part in the development and growth of AI as we know it today -- especially when it comes to the research that laid the groundwork for many of the algorithms and machine learning powering many AI models.
Alphabet has an AI research company under its belt called DeepMind that is responsible for breakthroughs like teaching computers to master complex games and predicting how proteins fold (a major medical advancement). These might not seem relevant to everyday AI technology on the surface, but they've shaped how modern AI learns, uses reasoning, and solves problems.
The tech giant's cloud computing platform, Google Cloud, has also been picking up steam. It still sits behind Amazon Web Services (AWS) and Microsoft's Azure in market share, but its growth has been impressive. In the second quarter, Google Cloud's revenue increased by 32% year over year to $13.6 billion, which the company said can be attributed to growth in AI infrastructure and Generative AI solutions.
Add in Alphabet's AI apps like Gemini and Flow, as well as the AI features it has added into Google Search (its biggest moneymaker), and Alphabet has positioned itself as one of the more well-rounded companies in the AI world. That's what you want to look for when investing in an AI stock. Its long-term potential doesn't solely rest on AI. Instead, it's an added bonus to a business that has proven it can adapt and innovate, and its business model works without the AI hype.
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Stefon Walters has positions in Apple, Microsoft, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, 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.
