Buy Now and Hold Forever: 2 Artificial Intelligence (AI) Leaders

Key Points

• Companies can't get enough AI chips, and that spells more growth for Taiwan Semiconductor Manufacturing.

• Apple has competitive advantages that could make it a sleeper AI stock to buy right now.

• 10 stocks we like better than Taiwan Semiconductor Manufacturing ›

The artificial intelligence (AI) market is expected to add trillions to the global economy, and investors looking for rewarding buy-and-hold investments in the field don't need to take high risks. Investing in companies that are supplying the computing hardware to power AI technology, as well as those that could benefit from growing adoption of AI-powered consumer products, could earn satisfactory returns. Here are two stocks to consider buying for the long term.

Image source: Getty Images.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

1. Taiwan Semiconductor Manufacturing

AI doesn't work without the right chips to train computers to think for themselves. While Nvidia and Broadcom report strong growth, Taiwan Semiconductor Manufacturing (NYSE: TSM) is the one making the chips for these semiconductor companies. TSMC controls over 65% of the chip foundry market, according to Counterpoint, making it the default chip factory for smartphones, computers, and AI.

TSMC manufactures chips that are used in several other markets, including automotive and smart devices. This means that when one market is weak, such as automotive, strength from another (high-performance computing and AI, for example) can pick up the slack.

TSMC's manufacturing capacity is immense. It can make 17 million 12-inch equivalent silicon wafers every year.

Its massive scale and expertise at making the most advanced chips in the world put it in a lucrative position. Over the last year, it earned $45 billion in net income on $106 billion of revenue. It has delivered double-digit annualized revenue growth over the last few decades, and management expects this growth to continue.

In the second quarter, revenue grew 44% year over year. This growth has pushed the stock up 51% over the past year. Management expects AI chip revenue to grow at an annualized rate in the mid-40s range over the next five years, which is a catalyst for long-term investors.

With Wall Street analysts expecting the company's earnings per share to grow at an annualized rate of 21% in the coming years, the stock should continue to hit new highs, as it still trades at a reasonable forward price-to-earnings ratio (P/E) of 24.

2. Apple

Apple (NASDAQ: AAPL) hasn't made a huge splash in AI yet. Apple Intelligence brought some useful features to its devices, such as AI summaries and image creation, but it's not as robust as customers were expecting. However, investors shouldn't count the most valuable consumer brand out just yet. Apple has a large installed base of active devices, and millions of customers trust Apple with their personal data, which could put it in a strong position to benefit from AI over the long term.

Apple previously partnered with OpenAI for ChatGPT integration across its products, but with OpenAI now positioning itself as a competitor after bringing in Apple's former product designer Jony Ive, Apple is rumored to be exploring a partnership with Alphabet's Google's Gemini to power its Siri voice assistant.

Apple appears to be a sleeping giant in AI. Millions of people are walking around with a device that Apple can turn into a super-intelligent assistant with a single software update. Its large installed base of over 2.35 billion active devices is a major advantage that shouldn't be underestimated.

But Apple has another important advantage that other tech companies can't match: consumer trust. Apple has built its brand around protecting user privacy, whereas Alphabet's Google and Meta Platforms have profited off their users' data to grow their advertising revenue. A partnership with Google for AI would not comprise Apple's position on user privacy, since Google would need to provide a custom model that runs on Apple's private cloud.

For these reasons, Apple is well-positioned to be a leader in AI, making its stock a solid buy-and-hold investment. It says a lot about its growth potential that analysts still expect earnings to grow 10% per year despite the fact that the company is lagging behind in AI. The stock's forward P/E of 32 is on the high side, but that also reflects investor optimism about its long-term prospects.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Taiwan Semiconductor Manufacturing wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $671,288!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,031,659!*

Now, it’s worth noting Stock Advisor’s total average return is 1,056% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 8, 2025

John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Alphabet, Apple, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.