2 Super Semiconductor Stocks to Buy and Hold Through the Next Decade

Artificial intelligence (AI) looks poised to be the most important technological advancement the world has seen to date, and the data center build-out to support it still appears to be in the early innings. Two of the semiconductor stocks best positioned to ride this trend over the next decade are Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD).

While the amount of money spent on AI infrastructure already seems staggering, WisdomTree recently pointed out that the cumulative spending-to-GDP (gross domestic product) ratio is actually significantly less than past historical transformation booms, including the railroad boom of the 1860s, the electrification boom of the 1920s, and the internet boom of the late 1990s.

I'd also add that there are a couple of other factors working in AI's favor. One is that we have a much more interconnected global economy today, so I think the U.S. GDP used in these calculations could actually be replaced with global GDP today. Unlike past technological advancements, AI also has more potential applications and isn't bound by individual consumption. Finally, the technological curve has steepened, meaning new technological advancements are happening much quicker than in the past. It wouldn't be surprising, for example, for the AI build-out to bleed into other big technological advancements like robotics, space, and quantum computing.

Overall, this means there will be much more spending on chips, and Nvidia and AMD are poised to benefit.

1. Nvidia

Nvidia has been the biggest AI winner to date, as its graphics processing units (GPUs) are the primary chips used to train AI models. However, I think investors often overlook what makes the company so great: It sees where the market is moving before everyone else.

It initially did this by creating its CUDA software platform, which allowed its chips to be easily programmed for different tasks outside of what was the lucrative video game market at the time. It then smartly seeded CUDA in places that were doing early AI research, and it bought a networking company, Mellanox, that was ahead of its time.

Seeing the market shift to inference, it smartly "acquired" Groq and its language processing unit (LPU) technology to give it a high-end differentiated offering while it developed its own high-end central processing units (CPUs) to tackle agentic AI. More recently, it has been scooping up AI software companies that help orchestrate and distribute AI, turning it into a complete AI infrastructure platform.

The biggest reason to own Nvidia stock over the next 10 years isn't its current growth; it's because the company is already headed toward where the ball is going, even before it's passed.

2. AMD

Image source: The Motley Fool.

While AMD dropped the ball on the AI model training market, it's working hard to not get outflanked again. Its recent announcement that it is acquiring World Labs is a great example of this. World Labs specializes in spatial AI models that can simulate 3D environments based on text, video, or image prompts. It's the type of AI model that will likely one day be used in physical AI and help power things like advanced AI robots and 3D content creation. This is a deal all about the future and not one about selling more chips today.

AMD also understands the important relationship between memory and chips for inference and has designed its chips and made acquisitions to become a major player in this space. Its chiplet design can be packaged with more memory, while it has also acquired inference chipmaker Taalas, which hardwires models directly onto its chips, and memory optimization company MEXT. Together, this positions AMD to capture enterprise workloads constrained by memory costs and availability.

AMD is also a leader in server central processing units (CPUs). This market looks set to explode higher with the rise of AI agents, and the company is ahead of the pack with its advanced chips in this area.

Given how AMD has positioned itself for the future, this is an AI stock to hold for the next decade.

Geoffrey Seiler has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends WisdomTree. The Motley Fool has a disclosure policy.