The artificial intelligence (AI)-fueled semiconductor boom isn't showing any signs of slowing, as major hyperscalers and pure-play AI companies continue to invest aggressively in infrastructure to meet the tremendous demand for AI services and to fulfill their massive contractual backlogs. Market research firm Omdia estimates that the global semiconductor industry's revenue could jump by an impressive 94% in 2026. The firm notes that computing and data storage chips will generate just under $1 trillion in revenue this year.
Importantly, semiconductor specialist Advanced Micro Devices (NASDAQ: AMD) predicts that the market for high-performance and AI computing chips could reach $2 trillion by 2030. This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » This is great news for semiconductor stocks such as AMD and Nvidia (NASDAQ: NVDA), which have been enjoying phenomenal growth amid booming demand for AI chips. However, I think that there is a better way to play the AI-driven semiconductor boom by investing in a company that plays an instrumental role in powering AMD and Nvidia's solid growth -- Taiwan Semiconductor Manufacturing (NYSE: TSM).
AMD and Nvidia design data center chips such as central processing units (CPUs) and graphics processing units (GPUs). These are deployed in AI data centers and edge applications, such as personal computers and vehicles. Both companies have been experiencing phenomenal growth in revenue and earnings.
AMD recently released its second-quarter results, posting a 50% year-over-year increase in revenue to $11.5 billion. Its non-GAAP earnings increased at a much stronger pace of 246% year over year to $1.66 per share. AMD attributed its impressive performance to robust demand for its server CPUs and GPUs, resulting in a 107% year-over-year increase in data center revenue in Q2.
The good news for AMD stock investors is that its solid growth trajectory is here to stay. The company anticipates a 41% year-over-year revenue increase in the current quarter. However, it could exceed that estimate due to the launch of its Helios rack-scale server platform and the introduction of newer, faster AI compute chips.
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