Although artificial intelligence (AI) investing gets a ton of attention from the market, there’s a good reason for that. It’s where the majority of cash flows are being poured into, and following the money to where it’s being spent is a genius investing strategy.

Right now, most of the AI hyperscalers are still building their computing capacity, making companies that sell this equipment into great investments. I believe stocks like Nvidia (NVDA 0.27%), Taiwan Semiconductor (TSM -1.17%), and Broadcom (AVGO -0.48%) are among the best buys now, as they receive a boatload of this spending.

1. Nvidia

Nvidia has topped the list of best AI companies to invest in since the trend began in early 2023. Its graphics processing units (GPUs) are the computing muscle behind most of the AI technology people experience today, and show no signs of slowing down. Nvidia’s management projects that the AI hyperscalers will spend $600 billion on capital expenditures for AI data centers this year, but that figure could reach $3 trillion to $4 trillion globally by 2030. Nvidia captures a sizable chunk of that spending, as Wall Street analysts expect Nvidia to generate around $206 billion in revenue this year.

Time will tell if Nvidia can capture a large chunk of that projected spending, and a lot of it will hinge on whether its products are accepted back in China once the U.S. government grants Nvidia’s export license. However, I think that Nvidia still has the world’s best technology for general-purpose computing, making its products a no-brainer choice when building artificial intelligence computing capacity.

Nvidia remains a top stock pick in the AI realm, even if it has been a massive success over the past few years.

2. Taiwan Semiconductor

Nvidia is what’s known as a fabless chip company. It designs the products, but relies on other companies to manufacture the components that go into them. One of the most important companies in this setup is the chip foundry, which produces the microchips in the devices. Nvidia uses Taiwan Semiconductor for this work, and TSMC has made a name for itself in the industry by providing best-in-class technology and production yields.

Nearly all leading tech companies use TSMC’s chips. Often, two competitors both use chips produced by TSMC, such as Nvidia and AMD (AMD -1.05%). Because Taiwan Semiconductor is acting as a neutral party fabrication facility, this arrangement works great and allows it to capitalize on massive technology trends.

An investment in Taiwan Semiconductor is a bet that companies are going to use more advanced chips, and a greater quantity of them, in the future. I think that’s a very safe assumption, making TSMC a great stock to buy now.

3. Broadcom

Broadcom is challenging Nvidia’s dominance in the AI computing market by partnering with AI hyperscalers to design custom AI accelerator chips.

Nvidia GPUs are the undisputed leader of multi-purpose computing, and can handle many types of workloads, whether it’s AI training, cryptocurrency mining, or engineering simulations. However, if a client only uses an Nvidia GPU for one workload, these capabilities are wasted. By designing an AI chip with one workload in mind, Broadcom can achieve greater performance at a cheaper price.

This makes Broadcom’s custom AI accelerators a potentially massive business, and it’s starting to show up in the company’s results. In third-quarter fiscal year 2025 (ended Aug. 3), Broadcom’s AI revenue soared 63% year over year, outpacing Nvidia’s 56% growth rate.

This shows that Broadcom is gaining market share in this area, and it could be a force to reckon with over the next five years. I think Broadcom will be a great investment over the next few years as a result, and investors should consider scooping up shares alongside Nvidia and Taiwan Semiconductor.

Keithen Drury has positions in Broadcom, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.

Shares of Taiwan Semiconductor Manufacturing Company (TSM 3.20%) jumped 3% through 2:35 p.m. ET after CEO C.C. Wei told shareholders at the company’s annual general meeting that TSMC expects to earn “record profit” in 2025.

Of particular interest to investors, Wei said he’s “not afraid” that President Donald Trump’s tariffs turmoil will keep TSMC from reaching this goal.

TSMC and tariffs

“The impact of tariffs on TSMC is not direct,” Wei said. “Tariffs are paid by importers. However, tariffs will make prices higher and could drag down demand.” Regardless, “overall AI demand is still very high” — indeed, higher than the production capacity to fulfill it. Thus, if U.S. buyers pull back on buying semiconductors manufactured in Taiwan, well, there are always other buyers elsewhere.

Long story short, Wei is confident his company can continue growing sales in the mid-20% range despite tariffs threats. Because even if supply eventually meets demand for artificial intelligence applications, new markets are forming to create even more demand for the company’s chips.

Which markets? “The chip demand for humanoid robots starts now,” declared Wei.

Is TSMC stock a buy?

So demand for TSMC’s chips shouldn’t be an issue. But should you demand to buy some TSMC stock?

Maybe.

On the one hand, a mid-20s growth rate compares favorably against a TSMC P/E ratio of only 24, suggesting TSMC stock is cheap. On the other hand, TSMC’s free cash flow isn’t quite as robust as its reported generally accepted accounting principles (GAAP) earnings suggest. The company reported $39.4 billion profit over the past year, but FCF was only $27.3 billion, meaning TSMC generated cash profit of only about $0.69 for each $1 in claimed profit.

With a price-to-free-cash-flow ratio of more than 31, TSMC still seems pricey to me.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.