Big Tech Is on Track to Spend Over $1 Trillion on AI Infrastructure by 2028. These 3 Semiconductor Stocks Could Be the Biggest Winners (Hint: Not Nvidia)

Core Insights - There is significant opportunity in the AI sector, with major tech companies increasing their capital expenditures for AI infrastructure, indicating a strong growth trajectory for related stocks [1][2] Group 1: AI Infrastructure Spending - Alphabet plans to increase its capital expenditures to $85 billion in 2023, up from a previous outlook of $75 billion for 2025 [1] - Amazon has raised its capex budget to $118 billion, an increase from $100 billion [1] - Dell'Oro Group forecasts that the top 10 big tech companies will spend over $1 trillion on AI infrastructure by 2028, up from approximately $593 billion in 2023 [2] Group 2: Nvidia's Performance - Nvidia has benefited significantly from the increased spending on AI, with a 69% year-over-year revenue growth and a 57% profit increase on an adjusted basis in its most recent quarter [3] - Despite strong past performance, Nvidia may not be the best investment choice moving forward [4] Group 3: Investment Opportunities - Marvell Technology: - Marvell is involved in custom AI chip designs for Amazon and Microsoft, focusing on cost-efficient XPUs [5] - The XPU market is expected to grow, with Marvell seeing a $55 billion opportunity by 2028, compared to its recent revenue of $6.5 billion [6] - Microsoft is expected to ramp up production of its next-generation Maia300 chip, potentially generating $10 billion to $12 billion in annual revenue from this design [8] - Marvell's stock trades at 27 times forward earnings, making it a more attractive option compared to Broadcom, which trades at 45 times [10] - Micron Technology: - Micron is a key supplier of high-bandwidth memory (HBM) chips, crucial for generative AI applications [11] - The company has secured significant contracts, including supplying HBM3E chips to AMD, and plans to produce HBM4 chips next year [12][13] - Micron's HBM sales increased by 50% sequentially, contributing to a 15% revenue increase from the previous quarter and a 51% increase year-over-year [13] - The stock trades at 14 times earnings estimates, presenting a potential investment opportunity as AI spending rises [16] - Taiwan Semiconductor Manufacturing (TSMC): - TSMC is the largest chip fabricator globally, producing chips for major companies like Nvidia and Broadcom [17] - The company benefits from a strong technology lead and a virtuous cycle of reinvestment in R&D and capacity [18] - Recent developments, including Intel's withdrawal from certain fabrication services and a tariff exemption, position TSMC favorably for ramping up its 2nm process [19][20] - TSMC shares trade for less than 25 times forward earnings, with expected revenue growth of 20% per year through 2029 driven by AI chip demand [22]