AI Spending Could Soar to $4 Trillion: 2 No-Brainer Stocks to Buy Now (Hint: Neither Is Nvidia)

Nvidia CEO Jensen Huang projects AI infrastructure spending to reach $4 trillion by the end of the decade, signaling a massive buildout that extends beyond chip designers. This surge is driving significant demand for crucial enablers like Nebius Group, an AI cloud capacity provider that reported 625% year-over-year revenue growth, and Taiwan Semiconductor Manufacturing (TSMC), the world's largest foundry manufacturing chips for major AI players, which saw a 38% revenue increase and is investing $165 billion in U.S. facilities to meet sustained demand.

Analysis

Jensen Huang, the chief executive officer of Nvidia, recently made a prediction. He said that he expects artificial intelligence (AI) infrastructure spending to soar to as much as $4 trillion by the end of the decade. As leader of the world's No. 1 chip designer and someone who maintains close communication with customers, Huang has a clear idea of what's to come in this high-growth market. So, when he speaks, investors sit up and take notice. Trends we've seen in recent times support Huang's prediction. Companies from Meta Platforms to Alphabet have increased capital spending plans to boost this AI buildout. And chip designers as well as cloud service providers have reported increasing demand and revenue quarter after quarter. Though prices of these stocks have climbed, the good news is that it's not too late to add to your positions in certain players or open a new position. This infrastructure buildout suggests the momentum will keep going. Now, let's check out two no-brainer stocks to buy right now, and I may surprise you when I say I won't be talking about Nvidia. Though Nvidia is a clear AI star, the following two companies may be among the biggest winners as the general need for AI capacity soars. 1. Nebius Group Nebius Group (NBIS 1.75%) offers the capacity customers so desperately need, and it's resulted in explosive revenue growth in recent times. In the latest quarter, revenue surged 625% year over year to about $105 million, and the company's AI cloud business even reached positive adjusted EBITDA ahead of its expectations. Customers come to Nebius for access to high-powered graphics processing units (GPUs), or the AI chips necessary for key AI tasks like the training of models or inferencing -- the "thinking" process that helps the model solve complex problems. So, customers don't have to buy their own GPUs, and instead can rent this compute from the cloud services provider. This can save them both time and money. Meanwhile, customers also can opt for Nebius' managed services -- for example, MLflow for the handling of the machine-learning lifecycle. All of this makes Nebius a company that could see tremendous demand as this AI infrastructure spending phase advances. NASDAQ: NBIS Key Data Points To ensure its ability to serve demand, Nebius is ramping up and aims to add 1 gigawatt of power by the end of next year. (That's the equivalent of 100 million LED bulbs.) The stock has soared more than 300% this year but still could have room to run as this phase of the AI boom unfolds. 2. Taiwan Semiconductor Manufacturing Taiwan Semiconductor Manufacturing Company (TSM 1.50%) may benefit even more than chip giant Nvidia from the infrastructure buildout. That's because this player manufactures Nvidia's chips as well as the chips of other market giants, such as Advanced Micro Devices and Broadcom. This means that as demand for all of those products grows, TSMC, as the world's biggest foundry, could see revenue explode higher. Since it doesn't depend on the fortunes of just one chip designer, this stock makes a great bet for investors concerned about which player will dominate in the coming years. As long as demand for AI chips continues, and there's reason to be optimistic about that, TSMC's future is bright. NYSE: TSM Key Data Points TSMC also has made wise moves in recent times that should support its work in the U.S. market -- the biggest AI market globally -- and may shield it and its customers from the impact of import tariffs. The company has made enormous investments in U.S. manufacturing, and earlier this year said it would expand its investment to $165 billion to fund three new fabrication facilities, a research and development site, and two advanced packaging factories. This chip giant in the recent quarter reported a 38% increase in revenue and said current trends suggest sustained strength in AI demand moving forward. Considering all of this, TSMC, trading at 29 times forward earnings estimates, is very reasonably priced and looks like a no-brainer buy as AI infrastructure spending heats up. The outlook for the artificial intelligence sector points to a substantial infrastructure buildout, underscored by Nvidia CEO Jensen Huang's projection of a $4 trillion market by the decade's end. This macro trend is substantiated by increased capital spending from major tech firms like Meta and Alphabet. The analysis highlights two key beneficiaries positioned to capture this growth. First, Nebius Group (NBIS), an AI cloud services provider, is demonstrating explosive top-line momentum with a 625% year-over-year revenue increase to approximately $105 million in its latest quarter and has achieved positive adjusted EBITDA ahead of schedule. The company's model of renting GPU capacity is attracting significant demand, prompting plans to add 1 gigawatt of power by next year. Second, Taiwan Semiconductor Manufacturing (TSM) is presented as a foundational player, manufacturing chips for Nvidia, AMD, and Broadcom. This diversification insulates TSM from single-company performance risk while capturing broad-based demand for AI hardware. TSM reported a 38% revenue increase and is making a strategic $165 billion investment in U.S. manufacturing facilities, a move that could mitigate geopolitical and tariff-related risks while solidifying its access to the largest global AI market. At 29 times forward earnings, TSM's valuation is presented as reasonable given the sustained AI demand outlook.

Key Decisions for Investors

• Investors should consider exposure to foundational AI infrastructure plays beyond prominent chip designers, focusing on ecosystem enablers like cloud capacity providers and semiconductor foundries that benefit from broad market growth.
• For high-growth-oriented investors, Nebius Group (NBIS) warrants evaluation despite its 300% stock appreciation, given its 625% revenue surge and aggressive capacity expansion plans, but potential positions should be sized according to its early-stage risk profile.
• Consider Taiwan Semiconductor (TSM) as a diversified, lower-risk investment on the AI hardware boom, as its role as the primary foundry for multiple chip leaders and its significant $165 billion U.S. investment provide a strategic moat and mitigate supply chain risks.