Which Stocks Are Winning the AI Chip Race?

OpenAI CEO Sam Altman wants to raise $5–7trn to build an AI chip empire, while Softbank founder Masayoshi Son is seeking $100bn to establish an AI chip manufacturing business. As the AI chip race heats up, here is a collection of AI stocks to keep an eye on.

  • Intel has agreed to manufacture custom chips for Microsoft.
  • Apple’s iPhone 16, due for release in September, will be built with AI chips and come with AI features.
  • Meta has added Broadcom’s CEO to its board, citing his “deep expertise in silicon and energy infrastructure”.

Nvidia [NVDA] delivered its Q4 2024 earnings last week; clearly, demand for its artificial intelligence (AI) products is not slowing down anytime soon. Year-over-year revenue growth of 265% was supercharged by its data centre segment, which jumped 409%.

“Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations,” said Nvidia Founder and CEO Jensen Huang in a press release.

However, while Nvidia has become the bellwether of interest in generative AI, there are plenty of challengers.

Earlier in February, the Wall Street Journal reported that Sam Altman is in talks to raise $5–7trn to build an AI chip empire. Meanwhile, Bloomberg has reported that Masayoshi Son, Founder and CEO of Softbank [9984:T], is looking for $100bn to establish an AI chip manufacturing business — the project, nicknamed Izanagi, would complement Arm [ARM], the British chip designer in which Softbank holds a majority stake.

As the battle for AI supremacy continues to rage, AI is set to be a growth driver for the semiconductor sector until 2025, according to UBS research. The race will produce both winners and losers, but here are four other names that are bound to come up again and again in AI discussions this year.

Intel to Manufacture Microsoft Chips

Intel [INTC] last week launched Intel Foundry, “the world’s first systems foundry for the AI era”, according to a press release. Intel hopes the foundry will supercharge its AI ambitions and further challenge competitors Samsung [005930:KS] and Taiwan Semiconductor Manufacturing Co. [TSM].

Generative AI “has been the land of Nvidia, but we’re the one company that actually has the opportunity to participate in 100% of the AI market,” Intel CEO Pat Gelsinger told Wired in an interview published last week. “We know how to connect up networks and memory and [provide] supply chains and all of these other elements that we’re finding customers are super excited to take advantage of.”

The chipmaker announced at the launch of the foundry that it has agreed to produce custom chips for Microsoft [MSFT] in a deal that could end up being worth $15bn. The Intel share price is up 75% in the 12 months to 27 February.

Apple’s iPhone 16 To Feature AI

Apple’s [AAPL] upcoming A18 and M4 processors, which will both be included in the iPhone 16, are reportedly set to get an AI boost, in a move that will “significantly increase the number of built-in AI computing cores”, according to a 15 February Economic Daily report translated into English.

The Cupertino company also has plans to launch an AI tool to help developers generate code later this year. The tool, currently being tested internally, would rival Microsoft's Github Copilot chatbot, according to Bloomberg, which added that the next major iOS software should include a number of AI features.

The Apple share price is up 23.1% over the past 12 months.

Meta’s Custom AI Chip Ambitions

Meta [META] appointed Hock E Tan, the CEO of Broadcom [AVGO], to its board earlier this month, citing his “deep expertise in silicon and energy infrastructure”, which it hopes will help the company execute its long-term vision. Tan commented in a press release that “Meta has an incredible role to play in the next generation of computing as it evolves its platform and apps offerings for the future.”

The appointment is a sign that Mark Zuckerberg has ambitious plans for Meta. In a regulatory filing announcing the appointment, the social media giant revealed that it paid Broadcom $500.4m in 2023 for “services such as design, development and engineering”.

Meta will deploy its custom chips in data centres later this year, according to internal documents seen by Reuters. The Meta share price is up 184.4% over the past year.

Supermicro Share Price Surges

A little-known stock that has been riding the AI wave since the start of the year is Supermicro [SMCI].

Up 208.3% through 27 February, the company announced last week that it’s expanding its portfolio of AI applications for edge locations, like public spaces or retail parks — in layman’s terms, edge refers to data being processed close to where it’s collected instead of being sent to a data centre.

Speaking to computer publication CRN earlier in February, Supermicro Founder, President and CEO Charles Liang likened the AI revolution to the Industrial Revolution. “I personally believe this AI revolution impact to our planet can be even bigger than the Industrial Revolution because AI impacts our lives in everything, both visible and invisible,” said Liang.

The Supermicro share price is up 766.5% over the past 12 months.

Another Way to Invest in AI

The Global X Artificial Intelligence & Technology ETF

The Global X Artificial Intelligence & Technology ETF [AIQ] holds all five stocks as of 26 February.

As of 31 January, information technology accounts for 66% of the fund’s sector exposure, while communication services and consumer discretionary have been allocated 13.9% and 10.2% respectively; industrials, financials and healthcare have single-digit weightings. The fund is up 47.3% in the past year through 27 February and up 20.7% in the past six months.

The Roundhill Generative AI & Technology ETF [CHAT] holds Nvidia, Meta, Intel and Supermicro. As of 31 December, enterprise software accounts for 31.6% of the portfolio, while platforms and infrastructure have allocations of 25.5% and 25.4% respectively; consumer software has a 9% weighting. The fund is up 35.7% in the past year and up 27.7% in the past six months

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