Nvidia (NVDA 0.94%) recently became the world's first $4 trillion company. Demand continues to outstrip supply for its data center chips, which are the best in the world for developing artificial intelligence (AI) models. With all the added revenue pouring in, Nvidia has been looking for ways to put it to use. One way is by investing in smaller AI companies, equipping them with the financial resources and technical expertise they need to commercialize their products. Between 2022 and 2024, the chip giant in ...

Industry Overview - The semiconductor industry is experiencing a significant recovery, driven by optimism surrounding artificial intelligence (AI), particularly generative AI, which has increased demand for microchips [1] - The robust demand across various sectors has resulted in substantial revenue growth for chipmakers, contributing significantly to overall market performance and last year's market rally [2] Sales Performance - Worldwide semiconductor sales rose 3.5% sequentially in May, increasing from $57 billion in April to $59 billion, with a year-over-year surge of 19.8%, marking the 11th consecutive month of growth above 17% [4] - SIA President and CEO John Neuffer noted that global semiconductor demand remains high, with first-quarter sales surpassing the previous year's figures, particularly driven by a 45% year-over-year increase in the Americas [5] Future Outlook - The semiconductor market is projected to continue expanding at a double-digit pace into 2025, supported by strong demand for data center chips and memory products [7] - Global semiconductor revenues reached $627.6 billion in 2024, up 19.1% from $526.8 billion in 2023, with the first quarter of 2025 generating $167.7 billion, an 18.8% increase from the previous year [6] Investment Opportunities - Recommended semiconductor stocks include Taiwan Semiconductor Manufacturing Company Limited (TSM), Advanced Energy Industries, Inc. (AEIS), and RF Industries, Ltd. (RFIL), all of which have strong earnings growth potential and favorable Zacks rankings [3] - TSM's expected earnings growth rate for the current year is 34.1%, with a 19.8% year-over-year sales increase in May [9] - AEIS is expected to see a 39.1% earnings growth rate, while RFIL's earnings growth rate is projected to exceed 100% [11][12]

Core Insights - AMD is often overlooked by investors due to its second-place market share in the AI-driven data center accelerator market, trailing behind Nvidia [1] - CEO Lisa Su has a strong track record of exceeding expectations, and AMD's recent data center chips are gaining traction [2] - AMD has been consistently increasing its PC market share against Intel, indicating strong competitive positioning [2] - The long-term growth potential in AMD's core markets makes it a compelling investment opportunity [2] Market Growth Projections - Data center capital expenditure is projected to double over the next three years, with the data center accelerator market expected to grow from approximately $34 billion last year to $166 billion by 2030 [5] - The gaming GPU market is currently a $5 billion opportunity, anticipated to increase more than sixfold by 2030 [5] - The automotive GPU market is expected to reach $45 billion by 2030, reflecting a 33% annualized growth rate [5] - The global GPU market is forecasted to grow from $62 billion in 2024 to over $460 billion by 2032, representing a 29% annualized growth rate [5]