With powerful applications and explosive growth for a handful of technology stocks, 2023 is likely to go down in history as a major flashpoint for the artificial intelligence (AI) revolution. But it’s important to remember that AI’s transformative impact is just beginning to unfold.
Artificial intelligence will have a far-reaching impact that will unfold for decades to come, and investors who back the right players at this early stage of the game stand to win big. If you’re looking for AI stocks that still offer long-term growth, take a look at two companies that have market-crushing potential.
1. Taiwan Semiconductor Manufacturing
AI applications and services are largely run and delivered through the cloud, but still rely on semiconductor hardware concentrated in data centers. No company has a stronger position when it comes to manufacturing high-performance chips Taiwan Semiconductor Manufacturing (TSM -0.04%)Or TSMC as it is often called.
TSMC currently controls approximately 60% of the global market for contract semiconductor manufacturing. The fab leader’s dominance is even more impressive when it comes to manufacturing the kind of high-end chips that are central to Nvidia’s processors and other high-performance chips used for AI and accelerated computing. It controls more than 90% of the worldwide product market for the category.
The Taiwan-based company truly pioneered the dedicated-foundry business model and is a leader in the space. The fab company Samsung is at the second position and the player is at the third position Intel They also have substantial foundry services, their own design initiatives and ambitions. By contracting with TSMC, customers can rest assured that the company will keep their designs confidential and not try to integrate them into its own commercial ambitions.
What’s more, TSMC has also built a fantastic reputation for delivering semiconductors to customers on time and with extremely low defect rates. This has helped the company to remain the first choice for most of the leading semiconductor design firms, given the adverse business impact caused by supply chain disruptions and component failures.
TSMC also pays a dividend and has never reduced its payout since it began returning cash to shareholders in 2004. The company’s stock yields roughly 2% as of this writing.
When most people think of AI stocks, Roblox (RBLX -1.59%) Maybe the name doesn’t come to mind. The company operates an online virtual world that features a wide range of games and interactive experiences and is associated with the metaverse trend more generally.
But while AI has largely replaced the metaverse as the talk of the town on Wall Street, Roblox actually looks poised to capitalize on both trends.
Roblox’s platform allows users to create and monetize their own games and content. In the second quarter, the company paid roughly $165 million to creators on its platform, up 16% year-over-year. Over the past 12 months, the top 10 creators on its platform earned an average of $27 million each.
The company began rolling out new AI content creation tools this year, and the new capabilities across the platform could become a key performance driver.
With AI streamlining content creation and coding on Roblox, new experiences on the platform are becoming easier and more efficient. An ever-expanding breadth of virtual world content is central to attracting new users and maintaining high levels of engagement. As the platform continues to offer a wider range of experiences, it should be able to attract a wider user base and see improved revenue through in-game currency purchases and advertising.
But Roblox’s AI opportunity isn’t limited to the creator side of things. The platform also has the potential to become a hosting ground for generative AI applications that demonstrate high levels of engagement with casual users.
The ability to generate text responses and images has already captured the imaginations of millions of people around the world, but applying generative AI tech to interactive 3D objects is still just beginning. Roblox has an opportunity to play a big role in changing that, and its ability to take advantage of artificial intelligence is lacking.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roblox and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel and long January 2025 $45 calls on Intel. Motley Fool has a disclosure policy.