Forget GPUs: Custom AI Chips Are the Next Trillion-Dollar Opportunity. Here Are 2 Stocks to Buy Now.

At present, Nvidia's graphics processing unit (GPU) is the primary bit of hardware used by the artificial intelligence (AI) industry. But there are signs that won't be the case for too much longer.

Google's parent company, Alphabet, has introduced its own competitor to the GPU with its Tensor Processing Unit (TPU), which is better suited to Google Gemini, the company's premier AI program.

Anthropic, the AI company responsible for Claude, has begun eagerly adopting the TPU. It's hoping to bring 1 gigawatt of computing power online with it this year.

OpenAI, the creator of ChatGPT, is doing the same and has been looking to move away from Nvidia hardware.

And, of course, you have companies like Advanced Micro Devices and Qualcomm presenting a more upfront threat to Nvidia, with direct competitors to its chips.

The AI industry is moving toward custom-designed chips more catered to the needs and goals of their particular AI programs and away from the jack-of-all-trades that is Nvidia's GPU.

Both of the companies in this article will be major beneficiaries of that change.

Image source: Getty Images.

Going their own way

The one company helping Alphabet, OpenAI, and Anthropic go their own way is Broadcom (NASDAQ: AVGO). The computer hardware design and production company has co-designed the TPU chip for Google for all seven of its generations.

It's also targeting $100 billion in AI chip revenue by the end of 2027. It's already anticipating that revenue to double over the course of 2026 to $8.4 billion, so that number is likely not all that much of a stretch.

Late last year, the company locked in a multiyear design partnership with OpenAI that will see it help the company develop 10 gigawatts of custom AI accelerators.

Shortly thereafter, Anthropic announced it would be adding 1 gigawatt of computing power through Google/Broadcom TPU chips through 2026.

That's not all; Microsoft, Amazon, and Meta Platforms also work with Broadcom, and once you factor those in, it makes sense why the company is projected to control a 60% share of the AI server compute application specific integrated chip (AISC) market by the end of 2027.

And Broadcom's latest results are about what you would expect for a company like it.

Net revenue for 2025 grew 24% over 2024 to $63.8 billion, and its diluted earnings per share (EPS) grew 40% over 2024 to hit $6.82.

The company also maintains a strong net profit margin of 36.57% and a healthy balance sheet with a debt-to-equity ratio of 0.83.

Broadcom is one to consider if you want to invest in the move away from Nvidia's general-purpose GPU toward custom chips for the major AI algorithms.

The AI factory

All of those chips will need to be manufactured by someone somewhere. Broadcom makes some of the chips it designs, but it doesn't have the manufacturing capacity to meet all of its demand.

For that, it turns to Taiwan Semiconductor Manufacturing (NYSE: TSM), the world's dominant pure-play chip foundry. It controls 72% of the market while Samsung sits at a distant second with 7% market share.

Taiwan Semiconductor is why Taiwan makes 60% of the world's semiconductors and 90% of its advanced chips.

As a pure foundry, it's kind of the opposite of Broadcom. Taiwan Semiconductor doesn't design any of the chips it manufactures. But it does manufacture chips for pretty much every big name in the chip industry, like Apple, Nvidia, Advanced Micro Devices, Qualcomm, and Broadcom itself, among others.

And given that it's basically the world's factory for not just AI chips but semiconductors in general, Taiwan Semiconductor has a gargantuan financial footprint.

For the whole of 2025, it brought in revenue of $122.42 billion, up 35.9% over 2024. Its diluted EPS surged 46.4% over the same time frame.

And it maintains an incredible net profit margin of 45% along with an incredible debt-to-equity ratio of 0.19.

Broadcom might be designing the chips, but Taiwan Semiconductor makes them. Put them both together, and you have the chance to profit no matter which company needs custom hardware for its latest and greatest AI algorithm.

James Hires has positions in Alphabet. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Qualcomm, and Taiwan Semiconductor Manufacturing and is short shares of Apple. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.