It's not just Nvidia: These are the other big winners in the AI chip business

COVID-19 has been hell for tech stocks and chipmakers, but AI has now flipped the script. Here are the companies that have benefited the most so far.

Nvidia is one of the largest chipmakers in the world. Image: Shutterstock

The epidemic may have brought storms, but it also gave birth to fertile ground for innovation.

Led by generative AI tools like ChatGPT and Stable Diffusion, the rise of AI has not only helped the tech industry recover but also fueled unprecedented growth. As we look to the future, one thing is clear: AI isn't just part of the tech industry; it's the tech industry, and it's becoming the tech industry.

Overall, markets are rebounding post-pandemic. However, the advent of artificial intelligence has been a particular windfall for tech stocks, especially hardware makers.

The most obvious recent example is of course NVIDIA, the company behind leading industrial-strength graphics processing hardware and creator of CUDA technology, without which contemporary AI development would not be possible.

In just five months, NVIDIA's stock price has experienced the largest surge in its history. It has now recorded a 166% surge after a 50% drop due to the combined effects of the political conflict between the US and China, the chip crisis in 2022, and the market stalling caused by the COVID-19 pandemic. The company has recovered from those losses in less than half a year, and it shows no signs of slowing down anytime soon.

NVIDIA stock. Image: TradingView

AI hardware manufacturers are on fire

However, NVIDIA isn't the only company benefiting from the AI wave. Other competing and related companies have also benefited greatly from this new trend. Below are some of the winners.

Advanced Micro Devices (AMD)

AMD manufactures high-performance computing and graphics solutions for AI applications. They have developed specific GPUs and CPUs optimized for machine learning and artificial intelligence workloads, and are the second most popular GPU choice for domestic users.

So far this year, the company's shares have risen 94%, from $65 to the current $125. If the stock hits $145, it will recoup all of last year's losses.

AMD stock. Image: TradingView

TSM

TSM is the world's largest dedicated independent (pure-play) semiconductor foundry. As a foundry, they produce chips for various companies, many of which are involved in artificial intelligence.

The company is up 39% since the beginning of the year. Another 20% increase can recover the losses in 2022. Chip crisis? Where?

TSMC stock. Image: TradingView

Micron Technology (MU)

Micron Technology is a global leader in the semiconductor industry. They manufacture a wide range of memory and storage products, which are key components of artificial intelligence and machine learning systems that require fast and efficient data processing.

MU shares are up 47% so far in 2023, and they have 27% more potential to grow before hitting resistance marked by all-time highs.

MU stock. Image: TradingView

Three Artificial Intelligence-Related Software Stocks to Watch

Beyond the hardware space, software companies have also had a stellar year, notably ChatGPT leading the hype due to the explosion of generative AI.

Meta

Meta, formerly known as Facebook, is one of investors' favorite companies. Shifting focus from the Metaverse to AI is bearing fruit for Mark Zuckerberg's company, which, in addition to implementing solutions within its traditional business model, has released important open source contributions, including the large-scale language model LLaMa.

A Large Language Model (or LLM) is an AI model trained on large amounts of textual data to generate human-like responses to different textual cues. (This simulates a conversation in natural language.) LLaMA is a very popular LLM among AI users and developers.

Meta posted its best half-year performance in history, up 116% so far in 2023.

Meta stock. Image: TradingView

Microsoft (MSFT)

Bill Gates' company is best known as the creator of the Windows and Xbox game consoles. But now it's becoming the "godfather" of OpenAI, the company that developed LLMGPT-4 and ChatGPT, the chatbot that brought artificial intelligence into the media spotlight.

OpenAI is valued at $29 billion, with Microsoft alone investing $13 billion. The decision to integrate GPT-4 into their Edge browser and Bing search engine, as well as use Bing as the default search engine for ChatGPT, has been a catalyst for the tech giant's share price. So far in 2023, Microsoft has risen nearly 40%, wiping out losses from the previous year.

Microsoft stock. Image: TradingView

Subsidiary company (GOOGL)

Alphabet, Google's parent company, has invested heavily in artificial intelligence. They developed tensor processing units (TPUs), which are custom-developed application-specific integrated circuits (ASICs) to accelerate machine learning workloads. They are also developers of TensorFlow, an open source artificial intelligence library, and provide cloud-based artificial intelligence services. In software, the company is more active.

The launch of Bard and its improved PaLM2 was successful, positioning it as a direct competitor to ChatGPT. The release of an LLM model tailored to client needs resonated positively among its investors (unlike what happened when the company launched its first chatbot and started hallucinating). Shares of GOOGL have risen 40% so far this year and are 20% away from gaining until they challenge resistance at all-time highs again.

Google stock. Image: TradingView