Data from Grand View Research shows the artificial intelligence (AI) market hit nearly $200 billion in 2023 and is projected to have a compound annual growth rate of 37% until at least 2030. That trajectory will see the industry reach close to $2 trillion, indicating it’s not too late to invest. AI stocks have captivated Wall Street over the last year, with bullish investors boosting the Nasdaq Composite by 27% since last June. Chip stocks enjoyed some of the biggest gains because these companies are crucial to the industry’s development as providers of the hardware necessary to train and run AI models. As a result, it could be worth adding a chip stock to your portfolio just as demand is soaring.
Two of the most attractive options are Intel and Advanced Micro Devices (AMD). These companies will likely profit from the tailwinds of AI for years as more companies enter the industry and require their powerful hardware. Intel has lagged behind in AI compared to rivals like Nvidia and AMD. But recent developments show the company hasn’t given up and might deliver major gains in the coming years. On June 4, Intel revealed new AI chips for data centers, just days after similar announcements from Nvidia and AMD. Besides new chips, Intel is setting itself apart from the competition by heavily investing in manufacturing. It’s building chip plants throughout the U.S., with Gelsinger recently saying its Ohio location would be the “AI systems fab for the nation.”
Like Intel, AMD is working hard to match Nvidia in AI. CEO Lisa Su told reporters at the Computex technology trade show in Taipei this month, “AI is clearly our No. 1 priority as a company.” In the first quarter of 2024, the company’s AI-driven data center segment posted revenue growth of 80% year over year thanks to increased GPU sales. However, Nvidia’s spot at the top of the market and Intel’s venture into manufacturing make Intel’s stock the better choice over AMD for long-term investors.
