The Future of AI: 3 Chipmakers Set to Profit from 2025 AI Infrastructure Boom

2024 is shaping up to be the year of artificial intelligence (AI), as the technology moves from the fringes to the mainstream, significantly impacting markets worldwide. A major driver of this AI revolution has been the semiconductor sector, where AI chips are powering everything from training large language models to AI inference tasks. As tech giants like Microsoft, Alphabet, Amazon, and Meta Platforms ramp up their AI infrastructure spending in 2025, a handful of chipmakers are poised to benefit the most. Here’s a look at three key players in the AI chip market.
1. Nvidia: The AI Infrastructure Leader
Nvidia (NASDAQ: NVDA) has become synonymous with AI infrastructure. Originally known for its graphic processing units (GPUs) designed for video games, Nvidia revolutionized the market with its CUDA software, allowing developers to use GPUs for a variety of applications beyond graphics. This innovation made Nvidia’s GPUs the backbone of AI development, controlling about 90% of the GPU market.
As large companies like Microsoft ramp up their AI efforts—Microsoft is reportedly Nvidia’s largest customer—the demand for Nvidia’s GPUs will only grow. Nvidia’s forward price-to-earnings (P/E) ratio stands at 31 times earnings, with a price/earnings-to-growth (PEG) ratio of 0.98, signaling that the stock is attractively valued for growth investors. Nvidia is poised to capture a significant share of the $80 billion that Microsoft plans to invest in AI data centers in 2025.
2. Advanced Micro Devices: The Growing Challenger
Advanced Micro Devices (NASDAQ: AMD) holds a distant second place in the GPU market with a 10% share. However, the company is seeing rapid growth, particularly in the AI data center sector. Last quarter, AMD’s data center segment revenue jumped 122% year-over-year, driven by sales of its Instinct GPUs and EPYC CPUs. AMD is also expanding its reach into AI inference, where its GPUs serve specialized use cases.
AMD’s stock is priced at a forward P/E of just 17 times, making it an appealing investment for those seeking exposure to the AI boom without paying the premium commanded by Nvidia. Furthermore, with the pending acquisition of ZT Systems, AMD is positioning itself to become a one-stop solution for data centers, adding another layer of potential growth.
3. Broadcom: Custom AI Chips for Big Players
While Nvidia and AMD dominate the GPU market, Broadcom (NASDAQ: AVGO) is carving out a niche in designing custom AI chips, specifically application-specific integrated circuits (ASICs). These chips, tailored for specific tasks, often outperform GPUs in efficiency and energy consumption, though they lack the flexibility of general-purpose GPUs.
Broadcom has already seen success with Alphabet, helping develop tensor processing units (TPUs) that work alongside GPUs to reduce inference processing times and lower costs. Other major customers are believed to include Meta Platforms, ByteDance (owner of TikTok), OpenAI, and Apple. Broadcom estimates that its hyperscaler customers could deploy up to 1 million AI chips each by 2027, representing a $60 billion to $90 billion market opportunity.
Although Broadcom’s stock is priced at 36 times fiscal 2025 earnings, higher than Nvidia and AMD, its specialized AI chip business is poised to drive significant growth. As custom AI chips become more mainstream, Broadcom stands to benefit from its established relationships and growing customer base.