What Is One of the Best Artificial Intelligence (AI) Stocks to Buy Right Now?

It would be somewhat of an understatement to say that artificial intelligence (AI) has taken the business world by storm over the past few years. It has caused many companies to pivot, and many investors have followed suit, hoping to profit from the new growth opportunities.

Although there are seemingly countless companies now dealing with AI in some capacity, not all of them make good investment opportunities. However, one stock that does is Taiwan Semiconductor Manufacturing (also known as TSMC) (NYSE: TSM).

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As a semiconductor (chip) manufacturing company, TSMC might not seem like an AI stock in the traditional sense, but it plays a pivotal role in the AI pipeline that makes it as important as any other company you can name. To see its importance, it's best to work backward, beginning with the end AI applications people interact with, like ChatGPT and others.

For AI to be effective, it must be trained on tons of data. This amount of data can't be stored in traditional ways; it requires massive, high-performance data centers. Inside these data centers are dozens of different types of hardware, including graphics processing units (GPUs), central processing units (CPUs), and networking equipment.

When it comes to the chips that power those hardware pieces, TSMC is the go-to source, with a monopoly on advanced AI chip manufacturing. And the reason it has this monopoly is because no other company comes remotely close to TSMC's efficiency, yield, and scale. Without it, the whole AI pipeline would suffer greatly. That ensures it's a company here to stay and not one boosted solely by AI hype.

Stefon Walters has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.