Broadcom’s custom AI units address another part of the computing market.
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Artificial intelligence (AI) spending is not expected to slow down anytime soon, let alone in 2026. AI hyperscalers have informed all investors that they expect data center spending to increase in 2026. As a result, several companies now look like promising buys.
I think these three are great places to put $1,000 each, and investors should act quickly before the market decides to give these stocks a higher premium than they currently command.
Image source: Getty Images.
Nvidia(NASDAQ: NVDA) it’s been at the top of almost every 2023 AI investment list for good reason: it’s well-positioned to capture huge growth. Nvidia’s graphics processing units (GPUs) are the main computing units used to train and run AI models, and its rise to become the world’s largest company by market capitalization can be directly linked to the generative development of AI.
While Nvidia has been a very successful investment over the past few years, I think 2026 will be an even better one than 2025. Nvidia enters the year trading at a lower valuation than it does right now in 2025. Last year, Nvidia stock traded at 50 times forward earnings — an expensive price. At 40 times forward earnings now, I think Nvidia is still a bit expensive, but the premium is well worth the upside it offers.
NVDA PE Ratio data (before) by YCharts
For fiscal 2027 (ending January 2027), Wall Street analysts expect a 50% increase in revenue. This is a strong performance after some strong results the previous year and shows that AI spending is not slowing down and not going anywhere.
As a result, Nvidia will continue to be a top investment option in the AI world, and I think every growth investor should have some exposure to Nvidia stock.
AMD(NASDAQ: AMD) it hasn’t had nearly the same success as Nvidia in the AI field. It has struggled to fit into Nvidia’s ecosystem, though there are signs it’s improving. Its control software, ROCm, has always been seen as an inferior version of Nvidia’s CUDA software. However, AMD reported that ROCm downloads increased tenfold year-over-year in November 2025, showing that AMD software is starting to become more popular. This could indicate that AI companies are taking a dig at how well AMD’s products perform and could begin to capture emerging market share from Nvidia.
Management believes it is positioned to do just that, and has told investors to expect a 60% compound annual growth rate (CAGR) of its data center business through 2030. That’s a huge acceleration from AMD over the past few years, and if management can meet those expectations, AMD is in great shape to grow in 2026.
Broadcom(NASDAQ: AVGO) they are not approaching the world of AI computing in the same way as AMD or Nvidia. These two offer GPUs, which excel in broad computing environments. However, most AI workloads are pretty established and could use some optimization. This is the area Broadcom is pursuing as it partners with AI hyperscalers to design custom AI chips known as ASICs (application specific integrated circuits). These computing devices are designed with an end-to-end workload in mind, so they are much more optimized than a GPU. This can lead to better performance at a lower price, all at the cost of flexibility.
Broadcom’s products won’t completely replace GPUs, but they will complement them, and we’re already seeing some of the effects of the popularity of these cheaper alternatives on Broadcom’s business. In the fourth quarter of fiscal 2025 (ended Nov. 2), its AI semiconductor revenue rose 74% year-over-year to $6.5 billion. For Q1, that business is expected to double year-over-year to $8.2 billion.
This is a massive increase and shows how much Broadcom can benefit from these custom devices in the future. Broadcom is working with several other hyperscalers to design their own chips, so this growth is just the beginning. I think Broadcom is a great investment to make alongside Nvidia and AMD, and all three of these stocks should outperform the market by a lot over the next five years due to massive AI spending.
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Keithen Drury has positions in Broadcom and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Got $3,000? 3 Artificial Intelligence (AI) Stocks to Buy and Hold for the Long Term was originally published by The Motley Fool
