Got $3,000? 2 Artificial Intelligence (AI) Stocks to Buy and Hold for the Long Term
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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...
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July 19, 2025
06:35 AM
The Motley Fool
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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.
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