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Major Investments in AI Infrastructure: What’s on the Horizon?

According to a recent report from Goldman Sachs, the rapidly evolving field of artificial intelligence (AI) is set to witness an astounding expenditure, with hyperscalers projected to invest over $500 billion in infrastructure this year alone. As companies ramp up their capital expenditure (capex) budgets, tech giants like Microsoft, Alphabet, Amazon, and Meta Platforms are united by a shared vision: to significantly accelerate the construction of data centers that will support this burgeoning growth.

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Key Players Benefiting from AI Infrastructure Growth

Let’s explore three prominent companies that stand to profit immensely from the tailwinds created by this explosive demand for AI-related infrastructure both in 2026 and beyond.

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Image source: Nvidia.

Nvidia: The Undisputed Leader

Nvidia (NASDAQ: NVDA) is the most evident winner in this race to expand AI infrastructure. This tech powerhouse ignited the AI revolution just three years ago when major tech firms recognized that Nvidia’s exceptional graphics processing units (GPUs) could be utilized to create various generative AI applications.

On the surface, the relentless demand for Nvidia’s GPUs has driven an exceptional surge in the company’s earnings. However, savvy investors should also pay attention to Nvidia’s profitability. As its operating cash flow continues to climb, Nvidia is well-positioned to focus on its innovation roadmap—regularly unveiling new GPU architectures approximately every 18 months. Currently, the Blackwell series is celebrated as the gold standard, but Nvidia is already amassing a considerable backlog estimated in the hundreds of billions of dollars as identity hyperscalers rush to secure the latest chips, known as Rubin.

This essentially means that as investments in training and inference accelerate, the demand for Nvidia’s versatile chipsets shows no signs of abating.

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The Complex Reality of AI Data Center Construction

Building AI data centers extends beyond merely outfitting them with rows of GPU clusters. The appeal of AI chips as industry favorites stems from their unparalleled ability to process complex algorithms at rapid speeds, yet there are underlying obstacles to scaling these technologies effectively.

Broadcom: The Unsung Hero

Another critical player in this sector is Broadcom (NASDAQ: AVGO), which supplies the essential components that ensure GPU clusters function seamlessly. Developers must also dedicate a significant portion of their budgets to less glamorous items, such as networking switches and interconnects.

Broadcom stands to benefit further from rising infrastructure spending through custom silicon solutions. Major firms like Apple, ByteDance, Alphabet, and Meta are reported to collaborate with Broadcom in designing custom application-specific integrated circuits (ASICs).

The hyperscalers aim to enhance their GPU capabilities by integrating their architectures to reduce costs and lessen their reliance on a single supplier. Though Broadcom may not always make headlines like Nvidia or Advanced Micro Devices (AMD), its diverse product portfolio plays an equally vital role in the broader narrative surrounding AI.

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TSMC: The Backbone of AI Chip Manufacturing

Lastly, one cannot overlook Taiwan Semiconductor Manufacturing Company (TSMC) (NYSE: TSM). If Nvidia and Broadcom drive the AI revolution with their chips, TSMC provides the essential manufacturing capabilities that keep everything moving.

TSMC ranks as the world’s largest chip manufacturer by revenue, commanding approximately 70% of the market share. Many companies, including Nvidia, AMD, Broadcom, Micron Technology, and various hyperscalers, offload their chip production to TSMC’s foundries.

Given its pivotal role, TSMC serves as a "pick-and-shovel" provider during this AI infrastructure boom. Regardless of which chip architectures are in high demand, TSMC is likely involved in their production. Rising capital expenditure budgets can be viewed as indicative of TSMC’s future trajectory, particularly as the company spearheads efforts to bring AI hardware to life.

According to its fourth-quarter earnings report, TSMC’s management views AI as a generational growth opportunity that is likely to generate substantial revenue and profit margin expansion over the coming decade.

TSMC: The Safest AI Investment

In light of these developments, TSMC could very well emerge as the most significant benefactor from the overarching themes driving infrastructure growth, positioning it as one of the safest AI chip stocks available for long-term investors.

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Cautionary Considerations Before Investing

Before diving into an investment in Nvidia, it’s crucial to be informed:

The Motley Fool Stock Advisor analyst team has identified what they consider the 10 best stocks to invest in currently, and surprisingly, Nvidia isn’t among them. The stocks making the cut could yield impressive returns in the foreseeable future.

Noteworthy Historical Performance

Take, for example, Netflix: if you had invested $1,000 when it was recommended on December 17, 2004, you would now hold approximately $448,476. If you had invested in Nvidia when it first made the list on April 15, 2005, that investment would be worth a staggering $1,180,126 today.

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Conclusion

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