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When investors think of artificial intelligence (AI) and the stock market, one name stands out: Nvidia (NVDA).
The chip giant has been the poster child for the AI boom, with its high-performance GPUs powering everything imaginable. However, as Nvidia’s valuation rises and competition heats up, investors are beginning to look beyond the obvious for high-quality AI investments. Let’s look at some other options.
AI Stock #1: Taiwan Semiconductor
Taiwan Semiconductor Manufacturing Company (TSM), also known as TSMC, is the world’s largest and most advanced semiconductor foundry. It makes chips designed by companies such as Nvidia, Apple (AAPL), Advanced Micro Devices (AMD), and Qualcomm (QCOM). Essentially, without TSMC, the AI revolution would lack the necessary hardware.
TSM stock has returned 252% in the past five years. So far this year, the stock is up 18.1%, outperforming the 5.7% gain in the S&P 500 Index ($SPX).
TSMC has built an impressive competitive moat by remaining technologically ahead and cultivating long-term relationships with industry titans. Nvidia, one of its largest customers, uses TSMC to manufacture advanced AI chips such as the H100 and GH200, which power AI data centers. With Nvidia’s sales soaring and other AI-focused companies such as AMD and Amazon (AMZN) racing to produce custom chips, TSMC is capturing a sizable share of this rapidly expanding demand.
In the first quarter, total revenue increased 35% year-over-year to $25.5 billion. Management stated that “7-nanometer and more advanced technologies accounted for 73%” of total wafer revenue. Diluted earnings per share increased by 60.4% in the quarter. Geopolitical concerns have loomed large over TSMC due to its Taiwan-centric manufacturing base. However, the company is actively diversifying its footprint. TSMC is developing advanced manufacturing facilities in Arizona, Japan, and Germany with the help of strategic partnerships and government subsidies. The Arizona plant, in particular, is expected to produce 3-nm chips by 2025, placing it among the most advanced facilities in the U.S. This reduces geopolitical risks and aligns TSMC with U.S. efforts to localize semiconductor supply chains.
It is difficult to match TSMC’s manufacturing leadership. Its yields, scale, and talent pool position it as the clear global leader, with a significant first-mover advantage. Analysts covering Taiwan’s stock expect earnings to rise by 34.1% in 2025 and another 15% in 2026. What makes TSMC more appealing to investors is that its valuation is reasonable when compared to Nvidia. While Nvidia trades at 36x forward earnings, TSMC is currently trading at around 24x, making it a more conservative entry point.
Overall, Wall Street believes the stock is a “Strong Buy.” Out of the 11 analysts covering the stock, eight have a “Strong Buy” recommendation, two analysts rate it a “Moderate Buy,” and one recommends a “Hold.” The average analyst target price of $233.12 is roughly in line with its current price. Its Street-high estimate of $259 indicates the stock can rally as much as 11% over the next 12 months.
AI Stock #2: C3.Ai
The second AI stock on my list is C3.Ai (AI), a lesser-known but ambitious AI player that is making progress in enterprise AI solutions. While Nvidia powers the chips, C3.Ai enables businesses to use AI to solve practical, high-value problems across industries. The company provides a platform for developing, deploying, and scaling AI applications that is specifically designed for large-scale, data-intensive enterprises.
Valued at $3.3 billion, C3.Ai stock has dipped 25% year-to-date, compared to the broader market gain.
Its main product is the C3 AI Platform, a model-driven, low-code/no-code environment that allows developers and data scientists to quickly build AI models. C3.ai also provides pre-built AI applications for industries including energy, manufacturing, defense, financial services, utilities, and healthcare. C3.ai has a growing list of well-known customers and partnerships. In fiscal 2025, the company completed 264 agreements across industries. In Q4, the company closed 69 agreements. Notable enterprise customers included Exxon Mobil (XOM), U.S. Steel , Bristol-Myers Squibb (BMY), Cargill, Chanel, Ericsson (ERIC), and others. Furthermore, state and local government revenue more than doubled in fiscal year 25, with Q4 adding 16 new deals across 12 states. C3.AI also renewed and expanded its multi-year alliance with Baker Hughes (BKR), a major oil field services company, through 2028.
In the fourth quarter, revenue rose to $108.7 million, up 26 % year-over-year. For the full fiscal year, revenue rose 25% to $389.1 million. However, the company reported a loss of $0.41 per share for the year. Analysts predict that revenue will increase by 19% in fiscal 2026, followed by another 18.9% in fiscal 2027. Losses could reach $0.37 per share in fiscal 2026 before falling to $0.15 in fiscal 2027.
The AI opportunity is vast. But the challenge of implementing AI involves transforming raw data into insights, integrating models into workflows, and ensuring security and scalability. This is where platforms like C3.ai shine. C3.Ai stock has significant long-term potential, but it is not without challenges. It is still not consistently profitable yet. Hence, it may be appropriate for aggressive investors with a long-term investment horizon.
Overall, Wall Street believes C3.Ai stock is a “Hold.” Out of the 13 analysts covering the stock, four have a “Strong Buy” recommendation, four analysts rate it a “Hold,” two say it is a “Moderate Sell,” and three recommend a “Strong Sell.” The average analyst target price of $30 for AI implies 20% upside above current levels. Furthermore, its Street-high estimate of $50 indicates the stock can rally as much as 100% over the next 12 months.
On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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