A Bank of America analyst has dubbed a group of megacap tech stocks the “Magnificent Seven,” comprising Nvidia, Alphabet, Apple, Microsoft, Amazon, Meta Platforms, and Tesla. While these companies have led the market through technological advancements, three additional stocks—Taiwan Semiconductor Manufacturing (TSM), Broadcom (AVGO), and Micron Technology (MU)—are emerging as critical players in the artificial intelligence (AI) sector. Their roles in chip manufacturing position them to capitalize on the surging demand for AI technology.

Taiwan Semiconductor and Micron are essential for the AI build-out, with Taiwan Semiconductor being the largest logic chip manufacturer and Micron focusing on memory chips. Both companies are experiencing robust pricing power due to high demand, with Micron projecting significant growth in the high-bandwidth memory market and Taiwan Semiconductor anticipating a nearly 60% CAGR in AI chip revenue through 2029. Broadcom is also making strides, with its AI semiconductor division seeing a remarkable 104% revenue growth in Q1.

Investors should consider these three stocks as potential additions to their portfolios, as their contributions to the AI landscape could rival those of the Magnificent Seven, especially given the projected explosive growth in AI-related demand.

Source: fool.com