Artificial intelligence (AI) is impacting every sector of the economy, so there are several ways investors can fit from this opportunity.
But recent earnings results show that top semiconductor companies are still well positioned to der outstanding returns for long-term investors.
Moreover, The AI chip market is expected to grow at an annualized rate of 24% through 2029 to reach $311 billion, according to and.
Furthermore, If you have $3,000 you're looking to invest right now, here are two chip stocks to consider buying and holding for the long term (which is quite significant), given current economic conditions.
On the other hand, Image source: Getty Images (which is quite significant). Advanced Micro Devices Advanced Micro Devices (AMD -2, in this volatile climate.
Furthermore, Additionally, 16%) has become a widely used brand of chips in the consumer PC market, in light of current trends. Its Ryzen cessors have taken significant market from Intel.
But it's also one of only two suppliers, along with Nvidia, of general-purpose graphics cessing units (GPUs) that are used for AI workloads.
Additionally, While Nvidia has a commanding lead in GPUs, it's not going to control 100% of the market, given the current landscape.
Additionally, At the same time, This leaves a substantial opportunity for the runner-up in this market to do well (remarkable data).
Nevertheless, AMD's data center is booming, with segment revenue up 57% year over year in the first quarter, in this volatile climate.
AMD is meeting demand for cost-effective alternatives in the chip market. Oracle is experiencing tremendous growth in its cloud infrastructure right now, and it's a key partner for AMD.
Oracle's cloud infrastructure will offer up to 131,072 AMD Instinct MI355X GPUs for AI.
AMD has already announced the MI400 series for launch next year, which will enable even better performance for AI training and inferencing.
Additionally, As data center sales make up a larger mix of AMD's total revenue, it is pushing margins up. Higher margins drove a 55% year-over-year increase in adjusted earnings last quarter.
Given the long-term opportunity in the AI chip market, which AMD estimates at $500 billion, investors are undervaluing AMD's future earnings, in this volatile climate.
Nevertheless, The stock is trading at a forward price-to-earnings (P/E) multiple of 38 on 2025 earnings estimates. On the other hand, But this multiple drops to 25 on 2026 estimates.
As AMD continues to expand margins from growth in its data center, the stock could offer significant upside over the next few years and beyond.
However, Conversely, Broadcom Beyond the surging demand for general-purpose chips that AMD supplies, there is growing demand for chips designed for specialized tasks.
On the other hand, Broadcom (AVGO -1. Additionally, 12%) is one of the best stocks to fit from the demand for custom chip solutions.
Nevertheless, Broadcom has been a top-performing semiconductor company for years, supplying components for many, including Apple's iPhone.
But demand for its application-specific integrated circuits (ASICs) for AI is off the charts, considering recent developments.
The company's AI chip revenue grew 46% year over year in the most recent quarter.
However, As demand for custom ASICs grows, it also fuels demand for networking ducts that can handle faster data transfer, which is needed for next-level AI performance.
Broadcom's new Tomahawk 6 Ethernet switch has enough data capacity to support 100,000 AI chips working together to train the next-generation AI models, in today's market environment.
The company's networking posted revenue growth of 170% year over year last quarter, representing 40% of its AI-related revenue.
However, management sees the demand for its custom AI chips outpacing sales of its networking ducts over time (an important development).
The data indicates that 's a huge opportunity, as evidenced by Broadcom's momentum. Management expects its AI growth to remain steady through fiscal 2026, which could support new highs for the stock.
Broadcom earns very high margins, so the favorable demand outlook points to robust earnings over the next year.
Moreover, The stock trades at 41 times this year's consensus earnings estimate, but that multiple drops to 33 on next year's estimate.
This analysis suggests that se are not cheap valuation multiples, but the investment in AI nology is pointing to substantial growth in the coming years for leading chipmakers, and that should support excellent returns for investors.
Nevertheless, However, Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors.
Additionally, John Ballard has positions in Advanced Micro Devices and Nvidia (an important development).
The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Intel, Microsoft, Nvidia, and Oracle.
Additionally, The Motley Fool recommends Broadcom and recommends the ing options: long January 2026 $395 calls on Microsoft, short August 2025 $24 calls on Intel, and short January 2026 $405 calls on Microsoft.
Moreover, The Motley Fool has a disclosure policy, given current economic conditions.