This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Key Points
- The U.S. government jumped into the AI race with the announcement of Project Genesis.
- Project Genesis will likely fuel continued demand for AI investments.
- The current AI leaders are strong bets for the future, too.
It seems the artificial intelligence (AI) race has escalated once again following President Donald Trump's announcement that he has issued an executive order to launch Project Genesis. The administration compared its significance to the famous Manhattan Project, the World War 2 initiative to develop the atomic bomb.
Project Genesis aims to develop an artificial intelligence platform utilizing supercomputers and data from various government agencies to accelerate America's efforts in advanced manufacturing, national security, and other key areas. While it's still early and the executive order didn't detail any specific funding, a federal AI initiative makes it all the more likely that the leading technology companies will continue to benefit from strong AI tailwinds that have made them such lucrative investments over the past few years.
Here are the top AI stocks to buy right now.
1. Alphabet
Google's parent company Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) surged recently following the release of its well-received AI model, Gemini 3. Notably, Alphabet trained Gemini 3 on its own Tensor Processing Unit (TPU) chips, which are purpose-built for its machine-learning workloads. Alphabet's TPUs have gained enough attention that Meta Platforms is reportedly considering implementing them in its data centers.
Alphabet's stock has soared over the past few weeks as the market recognized that it owns all the components of an AI ecosystem, including data centers, AI models, a cloud platform, and vast amounts of user data to train its models. Despite the stock's hot momentum, it's still trading at a reasonable price/earnings-to-growth ratio (PEG) of 1.8, a solid buying point for long-term investors today.
2. Nvidia
As the current leader in AI chip technology, Nvidia (NASDAQ: NVDA) has enjoyed a significant market share in the data center chip market, estimated to be as high as 92%. The company probably doesn't like seeing reports that its customers (Meta Platforms) are looking at other chips. However, Project Genesis is the latest signal that the AI market will ultimately be massive, perhaps too large for any single company to supply all the chips.
Nvidia's cutting-edge graphics processing units (GPUs) and CUDA programming arguably make it the fundamental AI company, as virtually every AI hyperscaler is using its chips. Nvidia will also likely receive numerous opportunities as the government ramps up its AI plans.
Eventually, Nvidia could expand beyond data centers into other AI applications, such as robotics and autonomous driving. It already has its eyes on both industries.
3. Taiwan Semiconductor
Which company is fabricating all of these AI chips? It's probably Taiwan Semiconductor (NYSE: TSM), the world's leading foundry (a company that manufactures chips). Taiwan Semiconductor's advanced manufacturing technology and capacity to produce mass quantities of high-end chips have enabled it to increase its market share in the AI era.
Today, Taiwan Semiconductor accounts for approximately 71% of the global foundry services market, measured as revenue share. Considering AI's thirst for computing power and the fact that all chip roads essentially lead to Taiwan Semiconductor, it's basically the ultimate pick-and-shovel AI play. The stock's PEG ratio of 1 is enticing for buyers.
4. Amazon
E-commerce giant Amazon (NASDAQ: AMZN) is a sneaky AI stock because it also operates the world's largest cloud computing platform in Amazon Web Services (AWS). AI, like most software today, runs in the cloud, giving Amazon a front-row seat to the AI growth opportunity. It has also developed a close partnership with Anthropic, one of the leading AI developers and a potential benefactor of Project Genesis.
Amazon and Anthropic just launched one of the world's largest AI chip clusters, which will have nearly 1 million of Amazon's custom AI chips by the end of this year. It could be a preview of what's to come as the government invests in AI infrastructure.
Much of this AI demand could flow to AWS, producing a windfall for Amazon. The stock is attractively priced now, with a PEG ratio below 1.6.
5. Microsoft
Diversified tech-giant Microsoft (NASDAQ: MSFT) operates Azure, the world's second-leading cloud computing platform. However, investors may want to own Microsoft for its close ties with OpenAI, the leading AI developer behind ChatGPT. Many view OpenAI as an AI pioneer, so it's hard to see Project Genesis not producing opportunities for OpenAI along the way.
Microsoft is tied to OpenAI through 2032 via a newly announced agreement, and the two companies are pooling their knowledge and resources to develop custom AI chips. Microsoft's large size and diverse businesses probably make it the slow-and-steady name on this list.
That may not be a bad thing, considering how unpredictable the AI boom has already proven to be. The company's PEG ratio of 1.8 is a reasonable valuation to pay for the stock.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
