The following three AI stocks are considered likely to continue outperforming the S&P 500 index over the next five years.
When people talk about AI chips, NVIDIA often comes to mind first. NVIDIA provides chips capable of handling a wide range of tasks, acting as a general-purpose semiconductor suitable for any tech company—namely, graphics processing units (GPUs), a market segment where NVIDIA holds a dominant position. However, Broadcom (AVGO) has carved out its own space in this market through custom chips.
Broadcom focuses on application-specific integrated circuits (ASICs). Some tech giants have specific goals that are difficult to achieve with GPUs alone, and custom chips can deliver higher efficiency and cost reduction. For example, Alphabet (GOOG) (GOOGL) and Meta Platforms (META) are both actively purchasing NVIDIA chips, but they also buy custom-designed chips from Broadcom—namely, the Tensor Processing Unit and the Meta Training and Inference Accelerator chips, respectively.
Broadcom is the second-largest chipmaker in the U.S. by market capitalization, and its AI semiconductor revenue in the fourth quarter grew 74% year over year, indicating that it will maintain its competitive edge.
AI chipmakers need to use various components to produce high-performance semiconductors. Semiconductor giants like NVIDIA, Broadcom, and AMD work closely with Micron (MU) in the field of high-bandwidth memory (HBM) chips. Micron’s products are essentially chips within chips; every time NVIDIA, Broadcom, or AMD sells an AI chip, demand for Micron’s products is driven upward.
Micron is shifting away from consumer-oriented products and moving toward the higher-margin AI sector to fully capture the AI opportunity. This transition to AI infrastructure explains why Micron’s revenue for the second quarter of fiscal 2026 (ended February 26, 2026) nearly tripled year over year and grew 75% sequentially. Micron’s revenue guidance for the current quarter is $33.5 billion (plus or minus $750 million), representing a 40% sequential increase at the midpoint. The stock has long been undervalued, but once investors took notice, its share price surged over 500% in the past year.
Despite this impressive rise, Micron still appears relatively undervalued, with a forward price-to-earnings (P/E) ratio of approximately 7 and a PEG ratio of 0.24. Micron is growing much faster than NVIDIA, which has a forward P/E of 23 and a PEG ratio of 0.77.
Alphabet has multiple paths for AI business growth. Google’s Gemini is increasingly appearing in search results, providing massive exposure for its AI models, which partly explains why Gemini already has 750 million monthly active users. Alphabet is also using AI to boost its online advertising revenue and is venturing into physical AI through its autonomous driving fleet, Waymo.
However, perhaps the biggest opportunity within Alphabet is Google Cloud. This cloud computing platform took over a decade to become profitable and has now become the single largest catalyst for Alphabet’s financial performance. Because AI inference requires substantial computing power, more and more companies are turning to cloud service providers like Alphabet. OpenAI and Anthropic are both Google Cloud customers, alongside many other business leaders using its cloud platform.
Google Cloud’s fourth-quarter revenue grew 48% year over year, and the company cited “enterprise AI infrastructure and enterprise AI solutions” as the primary catalysts for cloud revenue growth. Google Cloud also delivered $5.3 billion in net operating income for the fourth quarter, more than doubling year over year. This growth provides Alphabet with more capital to invest in “moonshot” projects like Waymo. Ample capital allows it to incubate small startups within the group, which could become significant growth drivers in the future. Over the past five years, Alphabet’s stock price has risen 176%, outperforming the S&P 500.
Summary: Broadcom, with its custom AI chips; Micron, leveraging high-bandwidth memory demand; and Alphabet, powered by the Google Cloud platform—each company taps into the AI industry chain at different points: hardware customization, memory配套, and cloud services. All three demonstrate strong growth momentum and relatively reasonable valuations, positioning them as representative AI stocks likely to continue outperforming the S&P 500 over the next five years.
