2 Artificial Intelligence (AI) Stocks to Buy Hand Over Fist Before the Next Earnings Season

Artificial intelligence (AI) companies have driven stock market performance in recent years as investors rush to get in on a major new growth area. AI may help companies generate cost savings, revenue gains, and innovation -- and those developing and selling AI as well as those using the technology are all positioned to benefit. Investors realized this early and piled into the most promising players, driving explosive stock performance for some.

Now the good news is that this story is far from over. Even if the overall market stumbles here and there as we've seen recently amid concerns such as conflict in Iran or worries about the economy, the long-term AI story remains intact.

And earnings reports from certain AI leaders may supercharge the performance of their shares. This is because these reports have been illustrating, quarter after quarter, the strength of the AI story -- they've shown surging revenue and high demand. With this in mind, let's check out two AI stocks to buy hand over fist before the next earnings season.

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1. Broadcom

Broadcom (NASDAQ: AVGO) is a networking giant, selling the routers and switches needed to connect complex systems -- including clusters of graphics processing units (GPUs). On top of this, Broadcom also designs custom AI chips called XPUs, and this product portfolio has helped earnings explode higher in recent quarters.

For example, in the latest period, AI revenue surged more than 100% to $8.4 billion, and the company predicts semiconductor revenue to surpass $10 billion in the next quarter. The strength was driven by "robust demand" for networking and custom accelerators, the company said. And Broadcom expects the company to generate AI revenue of $100 billion from AI chips alone in 2027. Broadcom has even ensured that it has the supply chain to support this goal.

Of course, Nvidia remains the AI chip leader, but Broadcom has the ability -- and is proving this -- that it can carve out enough share to drive mind-boggling growth. It's doing this because it offers a chip that's different from those of Nvidia. While Nvidia's GPUs are more general-purpose, Broadcom's are designed to suit specific tasks. So Broadcom doesn't compete directly with Nvidia.

Today, Broadcom shares trade at 30x forward earnings estimates, a reasonable price for a company that is already playing a key role in the AI boom.

2. Taiwan Semiconductor Manufacturing

Taiwan Semiconductor Manufacturing (NYSE: TSM) reported quarterly earnings in the early part of the latest earnings season -- in the first weeks of January -- and set the tone for what to expect from peers. That's because TSMC manufactures the chips of the market's leaders, including Nvidia, Broadcom, and others. So, if TSMC is seeing great demand, it's likely that chip designers and cloud companies are experiencing the same.

In the recent quarter, TSMC reported a 20% increase in revenue and a 30% increase in earnings per share amid AI demand. The company noted high demand from its customers -- the chip designers -- and their customers, cloud service providers. And this prompts its bright forecast: "Our conviction in the multi-year AI megatrend remains strong, and we believe the demand for semiconductors will continue to be very fundamental," chief executive officer C.C. Wei said during the earnings call.

All of this suggests that we may expect more growth during upcoming earnings reports. And this is supported by other market forecasts. For example, Nvidia chief Jensen Huang has predicted that AI infrastructure spending may reach $4 trillion by the end of the decade. Infrastructure build-out involves AI chips, so this trend should continue to fuel growth at TSMC.

And that means the company's next earnings report may be another stellar one, making now a fantastic time to get in on this top AI stock.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.