The Motley Foolยท2025-05-23 08:10Core Insights - AI stocks have shown strong price recovery and continue to present good investment opportunities despite their growth over the past two and a half years [1][2] - Major tech companies are expected to invest hundreds of billions of dollars in data centers this year, indicating sustained capital spending in AI [2] Group 1: Amazon - Amazon is the largest public cloud computing provider and is focusing on AI services and investments in AI model development [5][6] - The company plans to spend over $100 billion on capital expenditures this year, primarily for AI data centers, indicating strong demand for computing power [7] - Despite significant spending impacting free cash flow, Amazon's free cash flow remains over $25 billion, and the stock is trading about 15% below its all-time high, making it an attractive buy [9] Group 2: Tencent - Tencent operates WeChat, a comprehensive super-app, and has a significant mobile gaming and cloud computing business [10] - The company has seen improvements in its advertising business through AI algorithms, leading to higher engagement and gross margin expansion [11] - Tencent's stock trades at less than 20 times trailing earnings, providing an opportunity for investors to acquire shares at around $66 [14] Group 3: Taiwan Semiconductor Manufacturing (TSMC) - TSMC is a leading semiconductor manufacturer, holding about two-thirds of the third-party fabrication market, and is a key player in producing advanced AI chips [15][16] - The company expects revenue from AI accelerators to double by 2025, with an average annual growth rate of 40% through the decade, supporting a long-term revenue growth outlook of 20% CAGR from 2025 to 2029 [16] - TSMC's stock is trading below $200 per share, at 20 times forward earnings, making it a relatively attractive investment option [20]