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Pinpointing strong bargains in the stock market is key to success, and the market is full of them right now. While some may be concerned about tariff effects in the short term, most of these stocks have incredibly bright long-term outlooks. By shifting your focus from the next few months to the next few years, you can ignore some of today's events, and it will be obvious which stocks are great buys now.
Three companies that are down more than 30% from their all-time highs and look like excellent buys are Nvidia (NASDAQ: NVDA), Taiwan Semiconductor (NYSE: TSM), and ASML (NASDAQ: ASML). These three also represent a great picture of the AI chip value chain, and as long as AI continues to be an area where businesses invest, these three will succeed.
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The AI chip value chain is a lucrative area to invest in
As a quick overview of the supply chain, Nvidia places Taiwan Semiconductor's chips in its GPUs (graphics processing units), which have been the primary computing unit deployed by the AI hyperscalers. To make these chips, Taiwan Semiconductor needs specialized machines from ASML known as extreme ultra-violet (EUV) lithography machines. No company in the world has EUV technology besides ASML, so its engineering dominance has earned it a technological monopoly.
As the demand for Nvidia GPUs rises, so does the need for more Taiwan Semi chips. Increased chip demand requires more production capacity, which means more ASML EUV machines. Again, this requires AI demand to continue rising, which seems to be the way that it's heading.
Nvidia CEO Jensen Huang stated at its 2025 GTC event that data center buildouts will increase from about $400 billion in 2024 to $1 trillion by 2028. Considering that Nvidia's trailing 12-month total data center revenue was $115 billion, it gets nearly a third of all data center spending. That's a huge chunk of the market, and if Nvidia can maintain that percentage, it will deliver monster growth over the next few years.
This also jives with what Taiwan Semiconductor's CEO, C.C. Wei, has been saying. For 2025, they expect revenue from their AI-related chips to double. Additionally, over the next five years, they expect AI-related revenue to grow at a 45% compounded annual growth rate, which would be an incredible achievement.
While investors can speculate whether these projections are valid, the reality is that these two CEOs are better connected to the demand than almost anybody else. While they can still make mistakes, the odds of getting this information completely wrong are unlikely. As a result, investors need to take refuge in the fact that there is still a massive AI buildout going on, and this trend will be unlikely to be disrupted over the next five years unless a severe economic collapse occurs.