5 AI Semiconductor Stocks to Buy and Hold Through 2031

Key Points

• Nvidia and Broadcom are poised to continue to see huge growth coming from AI chip demand over the next five years.
• SK Hynix looks like the better buy than Micron over the next five years in the memory market.
• TSMC and ASML are two of the most integral companies in the semiconductor space.
• 10 stocks we like better than Nvidia ›

With the emergence of artificial intelligence (AI), the semiconductor industry has become one of the fastest-growing and most important industries in the world. Companies in the sector are seeing extraordinary growth, sometimes in the triple digits.

While that type of growth will not last forever, the industry should continue to see robust growth over the next five years. AI is still in its early innings, and cloud computing providers and neoclouds are seeing strong returns on their chip and networking investments with quick payback periods.

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Let's look at five semiconductor industry stocks to buy and hold for the next five years.

1. Nvidia: The AI platform company

Nvidia's (NASDAQ: NVDA) rise to prominence has been nothing short of spectacular, and it's showing no signs of slowing down. It grew its revenue an incredible 106% last quarter (fiscal 2027 Q2) to $96.2 billion, while saying it could have been higher if not for capacity constraints. That's a more-than-sevenfold increase in quarterly revenue in just three years.

The company has become the ultimate turnkey AI infrastructure platform, offering end-to-end AI servers for specific tasks. That will be its next big growth driver over the next five years.

2. Broadcom: The custom chip company

While Nvidia has turned to turnkey solutions, Broadcom (NASDAQ: AVGO) has become the go-to company for helping hyperscalers (large data center owners) develop their own custom chips to reduce costs. The company has seen its AI revenue surge, and that trend is expected to continue. It has been forecast that its AI revenue will double in fiscal 2027 to $115 billion, then double again in fiscal 2028 to $230 billion.

Broadcom has a clear line of sight into strong revenue growth over the next few years. That should continue only in later years, as new chip programs from Meta Platforms and OpenAI ramp up.

3. SK Hynix: The HBM leader

While many investors have placed their memory bets on Micron, I think SK Hynix (NASDAQ: SKHY) is the better investment option over the next five years. The memory market is being driven by demand for high bandwidth memory, which gets packaged with GPUs and other AI chips to reduce latency. The focus on HBM by the big three memory makers, meanwhile, has led to surging prices across the memory market, and the overall market remains supply-constrained.

The ironic thing is that HBM prices have increased the least, since they were already premium-priced with strong margins. SK Hynix is the HBM market share leader and derives a much higher percentage of its revenue from HBM than Micron. It also has a long-term agreement to be the main HBM supplier to Nvidia. Eventually, the market should flip, where it's more beneficial to produce HBM than ordinary, commoditized DRAM, and that is when SK Hynix should shine.

4. TSMC: The chip manufacturing leader

Manufacturing advanced logic chips, such as GPUs, isn't easy, and Taiwan Semiconductor Manufacturing (NYSE: TSM) has become the clear leader in the space through its technological expertise and scale. It has proven to be the only foundry consistently able to shrink chip density while achieving strong yields, giving it a virtual monopoly in the space.

This has given the company strong pricing power and made it a vital cog in the semiconductor space. With the proliferation of chips going into AI data centers, this is a stock that is sure to be a winner if the AI infrastructure boom continues over the next five years.

5. ASML: The monopoly

ASML (NASDAQ: ASML) is arguably the most important company in the world. It's the only company with the EUV (extreme ultraviolet lithography) technology needed to make high-end components for both advanced logic chips and HBM. It is also one of the few companies that offer DUV (deep ultraviolet) machines for making less critical components. Demand for its machines is soaring, and it expects to increase its EUV capacity by 30% next year, with a possible additional 30% in 2028.

Meanwhile, it has already started taking orders for its next-generation High NA EUV machines, which cost twice as much as its EUV machines and will be used to advance chip technology even further. As the sole supplier of the machines used to make the most important components of AI chips, the stock looks like a clear winner over the next five years.

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Geoffrey Seiler has positions in Broadcom and Meta Platforms. The Motley Fool has positions in and recommends ASML, Broadcom, Meta Platforms, Micron Technology, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.