Artificial intelligence (AI) has been the hottest technology topic for the past year and a half. This seems to have become inevitable as the technology has become more widespread, largely due to the commercial success of generative AI tools like ChatGPT.
The commercialization of AI has also recently been a catalyst for the stock prices of many technology companies. Many companies working even remotely with AI saw their stock prices skyrocket as investors rushed to capitalize on the recent boom. Despite the success of many of these companies, there appears to be much more room for growth.
Investors looking to gain exposure to the sector should consider the following three companies that are poised for a bull run.
1.Microsoft
After years of lagging behind Apple, Microsoft (NASDAQ:MSFT) has become the most valuable public company in the world, with a market capitalization of more than 3,100 billion dollars.
Microsoft’s involvement in AI comes primarily from its strategic partnership with ChatGPT creator OpenAI. What started as an initial billion-dollar investment in OpenAI in 2019 has become profoundly mutually beneficial.
OpenAI requires vast and scalable computing capabilities to operate as efficiently as possible. This is where Microsoft comes into play. Microsoft’s cloud platform, Azure, forms OpenAI’s primary computing infrastructure, and in return, Microsoft obtains exclusive licenses for OpenAI’s Large Language Models (LLMs).
Access to OpenAI’s LLMs has given Microsoft an advantage as it is able to integrate them into its products and services and strengthen its offerings. Microsoft already has a diverse ecosystem of services that many consumers and businesses rely on. Add an AI component to make them more efficient and “smart,” and the potential for these services to dominate their industries increases.
2. Crowd strike
Crowd strike (NASDAQ:CRWD) is one of the first purely AI cybersecurity companies, having used the technology to automate cybersecurity processes for over a decade.
Other companies are undoubtedly adding AI capabilities to their cybersecurity platforms, but CrowdStrike has one competitive advantage that’s likely to endure: data. For AI-based tools to be as effective as possible, they need to be trained on tons of data, and “tons” is putting that lightly. CrowdStrike’s lead means it has several years of data that cannot be compared.
Business and financial results highlight the effectiveness of CrowdStrike platforms. Around 27% of its customers use at least seven of its modules (products in its ecosystem) and 64% use five or more. CrowdStrike’s net dollar retention rate was also 119% in the fourth quarter of its 2024 fiscal year, meaning its established customers spent an average of 19% more with it than during the year-round period. former.
According to CrowdStrike and market intelligence firm IDC, the AI-native cybersecurity market is estimated to be worth around $100 billion this year. By 2028, it is expected to reach $225 billion. This gives CrowdStrike plenty of opportunities to continue to assert its market dominance and provide good value to long-term investors.
3. Taiwan Semiconductor Manufacturing Company
As a semiconductor foundry, Taiwan semiconductor manufacturing company (NYSE:TSM) (TSMC) may not seem like an AI stock, but its importance to the AI ecosystem cannot be overstated.
If AI applications like ChatGPT or other LLMs are the end product of a tree, the semiconductors manufactured by TSMC are the initial seeds. And it all starts with data and data centers. Data centers are essential because they are the only way to store the large amount of data needed to train AI, and these data centers rely heavily on graphics processing units (GPUs), which function as the brain of computing power.
Before you have working GPUs, you need semiconductors, and TSMC is the world leader in semiconductor manufacturing. This is why companies like Nvidia are among TSMC’s largest customers; they know that other semiconductors pale in comparison to TSMC’s, making it the benchmark for other major companies.
Without TSMC’s advanced processes, the AI pipeline would surely suffer, as it is likely that progress in the field would be slowed. This reliance alone makes TSMC one of the most important AI-adjacent companies. This domino effect should also result in AI-related semiconductors accounting for a decent share of TSMC’s revenue (high teens) by 2027.
TSMC is far from the only semiconductor foundry in the AI world, but it is the most critical.
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Steve Walters holds positions at Apple and Microsoft. The Motley Fool holds positions and recommends Apple, CrowdStrike, Microsoft, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Mad Motley has a disclosure policy.
3 Top AI Stocks Poised for a Bull Run was originally published by The Motley Fool
