The Nasdaq Composite is only at about breakeven for the year, as of this writing, but it's made a powerful comeback in recent weeks. The tech-heavy index is now down less than 1% year to date, a massive improvement from the drop of more than 20% it recorded in early April.
That doesn't mean it's too late to own tech names that are thriving from the boom in artificial intelligence (AI) spending. Here are three names that are in a prime position to benefit from the expansion of generative and agentic AI in the enterprise, education, healthcare, and beyond.
Image source: Getty Images.
King of the artificial intelligence (AI) ecosystem
The best way to profit from any growing field is to build an ecosystem around it. Think about how successful Apple has been with its app store, iPhone, Mac computers, and iCloud offerings. That's the approach Nvidia(NASDAQ: NVDA) is taking with hardware, software, and architecture for AI. CEO Jensen Huang is a proven visionary, and the company even has growth triggers beyond the world of AI.
AI is enabling change and improvement in every industry. Uses include generative AI and speech recognition, medical imaging and more efficient supply chain management. Nvidia is delivering enterprises the computing power, systems, tools, and algorithms needed. It's not just the powerful graphics processing units (GPUs) like Blackwell and the next-generation Rubin AI chips that Nvidia supplies, either.
Nvidia's NeMo provides a full platform for developing custom generative AI -- including large language models (LLMs), video models, and conversational AI. Its CUDA (compute unified device architecture) software platform allows developers to leverage Nvidia's leading chips using parallel processing power for more intensive applications. Nvidia's CUDA-Q is a quantum development platform enabling the use of large-scale quantum computing applications.
This is just a small sample of examples showing Nvidia's reach throughout the ecosystem. Nvidia is heavily involved even at the earliest stages of building AI factories where enterprises can deploy on-premises scalable, high-performance, AI platforms. Nvidia is also part of larger-scale projects like the recently announced United Arab Emirates Stargate global tech alliance. That will become a massive 1-gigawatt compute capacity data center.
Look upstream and downstream of Nvidia, too
These offerings and projects all create a flywheel effect that should only increase demand for Nvidia's products in the months and years ahead. It won't be the only beneficiary, though. Other obvious places to look next are Nvidia's direct upstream and downstream partners.
Taiwan Semiconductor (TSMC) (NYSE: TSM) fabricates many of the advanced chips that Nvidia and other major semiconductor companies design. So it shouldn't be surprising that the Nvidia supplier and partner saw revenue surge nearly 42% higher in the first quarter.
Those are profitable sales, too. Net income soared 60% versus the prior-year period. TSMC is also well on its way to accomplishing the approximately 40% revenue growth guidance it provided for the current quarter. April net sales jumped 48.1% compared to 2024.
One Nvidia customer that is also positioned to benefit from growth in data centers and AI compute capacity is Dell Technologies(NYSE: DELL). Dell is also a partner, working closely with Nvidia. It recently announced the "Dell AI Factory with Nvidia," which it says is "designed to help enterprises accelerate AI adoption and achieve faster time to value."
Dell is using its latest air- and liquid-cooled server solutions for AI servers and racks containing Nvidia hardware to deploy in data centers. The collaboration will help accelerate enterprises ramping up computing power. Dell is quickly gaining business in this area. Its server and networking revenue surged 37% in the fiscal fourth quarter ended Jan. 31. At that time, the company said its server business backlog more than tripled year over year to $9 billion.
All three companies play an important role in the booming artificial intelligence field. Each has its own role and expertise. Investors would do well to own all three to participate in the growth over the course of 2025 and beyond.
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Howard Smith has positions in Apple, Dell Technologies, and Nvidia. The Motley Fool has positions in and recommends Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
