2 Millionaire Maker Artificial Intelligence (AI) Stocks

Buying and holding great companies for the long term is a great way to make money in the stock market, as investors not only benefit from long-term growth opportunities by following this philosophy, but also take advantage of the power of compound interest. It’s a proven method.

Artificial intelligence (AI) is emerging as the next big growth opportunity for investors. Bloomberg estimates that in 2022 he generated an AI market worth $40 billion, and in 2032 he could generate annual revenue of a whopping $1.3 trillion. The AI ​​market is expected to register a compound annual growth rate of 42% during this period.

Therefore, now is a good time for investors to invest in companies that can benefit a lot from this lucrative opportunity in the long run. An investor could even become a billionaire if he buys AI stocks as part of a diversified portfolio. For example, suppose an investment of $10,000 is made. Nvidia The AI ​​hardware pioneer — what he was worth 10 years ago is now worth $1.68 million.

Of course, it’s illogical to expect other AI stocks to replicate Nvidia’s impressive gains. However, when you purchase stocks, taiwan semiconductor manufacturing (TSM 4.07%)Widely known as TSMC, super microcomputer (SMCI 4.54%) If you have $10,000 in investable cash, it could be a smart choice in the long run.

Assuming you have $10,000 at your disposal after paying bills, clearing high debts, and saving enough for an emergency fund, you can invest that money in TSMC and Super Micro to make $1 million. You can build a portfolio of Let’s see why.

1. Taiwan Semiconductor Manufacturing

Demand for semiconductors is rapidly increasing thanks to AI. According to the global semiconductor market in 2013 he generated revenues of $ 315 billion. gartner, this figure increased to $533 billion last year. Therefore, the global semiconductor market has increased in revenue by $ 218 billion over the past decade. AI is expected to drive even stronger growth in the global semiconductor market over the next decade.

Allied Market Research estimates that AI chip revenue could reach nearly $384 billion annually in 2032, at a CAGR of 38%. TSMC offers investors a surefire way to take advantage of this huge end market opportunity. The Taiwan-based company is one of the world’s leading foundries with an estimated market share of 58%, according to TrendForce. There is a large difference in second place samsungwith a market share of just over 12%.

The foundry business model means that TSMC manufactures chips for other companies.Its customers include: appleNvidia, broadcomand Advanced Micro Devices, among others. With a significant surge in demand for AI chips, TSMC is starting to drive solid growth. Sales of the company’s advanced chips made on the 5-nanometer (nm) process node have gained impressive momentum in recent quarters.

Additionally, TSMC currently expects the 3nm process node being introduced to make more powerful AI chips to contribute $12.7 billion in revenue this year.

In December 2022, TSMC management announced that the chipmaker will produce $1.5 trillion worth of end products using the 3nm process node within five years of mass production. This process node is currently in the spotlight, expected to account for 15% of TSMC’s revenue this year, and appears to be on the verge of an even bigger shift for the company.

Not surprisingly, analysts expect TSMC’s bottom line growth to increase significantly compared to last year’s $5.18 per share.

TSM EPS forecast for current year data by YCharts

If TSMC can achieve earnings per share of $8.90 in 2026 and trade at 31 times forward earnings at that time ( Nasdaq-100If we calculate the forward earnings multiple as a proxy for tech stocks, the company’s stock price could jump to $276. This represents a 115% increase in three years and suggests that TSMC could more than double investors’ money.

But if you can hold on to stocks for a longer period of time, say 10 or 15 years, they can offer even more upside potential and make a significant contribution to a million-dollar portfolio.

2. Super microcomputer

Super Micro Computer went public in 2007, and a $10,000 investment in stock at its initial public offering (IPO) is now worth more than $970,000.

SMCI data by YCharts

Stock prices tripled in 2024 due to rapid growth in AI. The company expects to end the current fiscal year with $14.5 billion in revenue, a significant increase compared to the previous fiscal year’s revenue of $7.1 billion. Super Micro’s growth skyrocketed as the company’s server solutions were adopted to implement AI chips. The good news is that Super Micro’s end-market opportunities are expected to expand significantly over the long term.

The global AI server market could reach $177 billion in annual revenue in 2032, up from $38 billion last year, according to third-party estimates. Super Micro’s full-year 2024 earnings forecast suggests that the company is at the beginning of an impressive growth curve, especially considering that it is expected to capture an even larger share of this market.

according to barclays, the company sat with a 7% share of the overall server market last year. But efforts to increase manufacturing capacity are expected to help it take market share from rivals. So it’s easy to see why analysts expect the company’s revenue to grow 48% per year over the next five years.

Based on fiscal 2023 earnings of $11.81 per share, Supermicro’s bottom line could grow to nearly $84 per share in five years. Multiplying the expected earnings by the Nasdaq 100 Index’s expected earnings multiple of 31 would give the company’s stock a potential value of $2,600. That would triple the current stock price.

Of course, the long-term opportunity for AI servers means Supermicro could see even bigger gains over the next decade. That’s why investors looking to build a million-dollar portfolio would do well to buy this AI stock with investable cash.