3 US AI Stocks Still Worth Buying at Market Highs

Core Viewpoint - The optimism surrounding artificial intelligence (AI) has propelled the S&P 500 and NASDAQ indexes to all-time highs, yet there remain US-listed stocks that present compelling long-term value despite elevated valuations [1] Group 1: TSMC (Taiwan Semiconductor Manufacturing Company) - TSMC is the leading semiconductor foundry, crucial for manufacturing chips for AI-related companies like AMD and NVIDIA [3] - In 2024, TSMC reported revenues of US$90.1 billion and net income of US$35.5 billion, allowing for significant investments in manufacturing capabilities [3] - The company's capital expenditures (CapEx) are projected to rise from nearly US$30 billion in 2024 to US$40 to 42 billion in 2025, representing nearly 34% of its expected 2025 revenue [4][6] - TSMC's 2nm process, set for volume production in 2025, offers the highest transistor density and power efficiency in the industry, positioning it ahead of competitors [5] - The company faces geopolitical pressures to establish facilities in higher-cost regions, which may impact margins [6] Group 2: Alphabet (Google) - Alphabet is both challenged and presented with opportunities by AI, as evidenced by a decline in Google searches on Safari due to users shifting towards AI [8] - The company is actively adopting AI technology, with YouTube launching over 30 AI tools to enhance content creation and video production [9] - Google Cloud sales are expected to grow at an average annual rate of 26% over the next five years, driven by increased AI demand [10] - Alphabet had a net income of over US$100 billion in 2024 and plans to increase CapEx to approximately US$85 billion in 2025 [11] - The company is under significant regulatory scrutiny, facing ongoing antitrust proceedings and potential fines [12] Group 3: Meta Platforms - Meta is leveraging AI tools to enhance user engagement and monetization across its platforms, including Instagram and WhatsApp [13] - The company reported US$165 billion in sales and US$62 billion in net income for 2024, with CapEx for 2025 estimated between US$66 to 72 billion [14] - Meta's AI initiatives include an AI-powered recommendation model that has improved ad conversions on its platforms [15] - Unlike Google, Meta lacks a presence in the public cloud market, limiting its avenues for returns on AI investments [16] Group 4: Investment Outlook - Despite high market valuations, long-term investors can benefit from companies like TSMC, Alphabet, and Meta, which exhibit strong growth potential driven by AI [17] - The combined CapEx for these three companies in 2025 is expected to exceed US$180 billion, which may pressure near-term profitability but positions them for long-term competitive advantages [18]