2 Top Artificial Intelligence (AI) Stocks Ready for a Bull Run

Over the past year, investors have taken a keen interest in companies that can benefit from the proliferation of artificial intelligence (AI), which is not surprising as this technology is expected to help improve the global gross domestic product (GDP) by 7%, or almost $7 trillion, over the next decade, as per Goldman Sachs.

Companies that are already benefiting from AI adoption have seen their shares surge big time. But there are a few companies whose share prices are yet to hit a higher gear even though they could win big from AI proliferation. Taiwan Semiconductor Manufacturing (NYSE: TSM), popularly known as TSMC, and SoundHound AI (NASDAQ: SOUN) are two such names.

TSMC stock’s 40% jump in the past year means that it has underperformed the PHLX Semiconductor Sector index’s gains of 50%. Meanwhile, SoundHound AI stock is down 5% in the past year even though it has been reporting solid growth thanks to the growing demand for its offerings. The good news is that both stocks have gained impressive momentum of late and look all set to go on a bull run. Here’s why.

1. Taiwan Semiconductor Manufacturing

TSMC stock is up 21% so far in 2024, and investors can expect this semiconductor bellwether to head higher thanks to the booming demand for AI chips. TSMC operates on a foundry model, which means that it manufactures chips that are designed by fabless chipmakers such as Nvidia and Advanced Micro Devices. Also, Apple is TSMC’s largest client, using the Taiwan-based company’s fabrication facilities to manufacture chips that are deployed in iPhones.

This strong clientele explains why TSMC’s revenue for January 2024 increased almost 8% year over year to 216 billion new Taiwan dollars ($6.86 billion). The month-over-month increase was even bigger at 22.5%. It is not surprising to see why TSMC’s growth is switching into a higher gear now. Last month, the company forecast that its 2024 revenue could increase more than 20%, and AI is going to play a crucial role in that…