TSMC and Oracle: 2 No-Brainer AI Stocks to Buy Now
AI demand lifts chips and cloud, highlighting TSMC and Oracle. Focus on earnings durability, backlog, capex; watch TSMC geopolitics and Oracle competition.
2 AI Stocks With Clear, Durable Growth Drivers for Finance Professionals
AI adoption continues to push demand for chips and cloud services higher. Independent estimates point to the AI chip market growing about 29% annually through 2030 and the cloud computing market growing near 20% per year. For investors building exposure to this trend, two names stand out for scale, moat, and visibility: Taiwan Semiconductor Manufacturing and Oracle.
1) Taiwan Semiconductor Manufacturing (NYSE: TSM)
TSMC is the dominant pure-play foundry, producing chips for Nvidia, Apple, and AMD. It controls over 65% of the global foundry market, a lead reinforced by decades of process know-how and customer trust.
Source: Counterpoint Research market share
AI and high-performance computing are lifting results: revenue rose 44% year over year in Q2 and net margin sits above 42%. The company is expanding manufacturing capacity, including in the U.S., to support demand and reduce tariff exposure.
On valuation, shares trade around a forward P/E of 28. With consensus calling for ~21% annualized earnings growth, the math supports meaningful upside over a multi-year horizon if the multiple holds.
- Key metrics to track: N3/N2 yield progress, advanced packaging (CoWoS/HBM) capacity, and customer mix concentration.
- Cash flow lens: capex cadence versus free cash flow and pricing for premium nodes.
- Risk watch: geopolitical exposure, export controls, and foundry competition attempts.
2) Oracle (NYSE: ORCL)
AI is lifting cloud infrastructure demand, and Oracle is converting that tailwind through its database leadership and an infrastructure stack tuned for AI workloads. Its multi-cloud approach with AWS, Google Cloud, and Microsoft is resonating with enterprises.
Headlines understate the underlying momentum: total revenue grew 12% year over year, but remaining performance obligations jumped 359%. Multi-cloud revenue rose 1,529% last quarter, and management expects cloud infrastructure revenue to grow 77% for the full year. Guidance implies total revenue growth of 16% in fiscal 2026 (constant currency), supporting a richer multiple as growth accelerates.
- Key metrics to track: RPO growth and conversion, large-deal pipeline, and data center capacity adds.
- Supply factor: availability of top AI accelerators and networking for customer deployments.
- Profit lens: mix shift toward OCI, operating margin trajectory, and capex intensity.
Portfolio takeaways
TSMC and Oracle sit at critical points of AI demand-compute manufacturing and cloud infrastructure. Both benefit from scale and customer stickiness, with different risk profiles: TSMC faces geopolitical and supply-chain variables; Oracle competes with hyperscalers while ramping capacity.
For allocation decisions, anchor on earnings durability, backlog visibility, and capital intensity. If earnings compound near current expectations and valuations stay steady, the setup favors solid multi-year returns.
