Despite Market Correction, AI Infrastructure Investment Continues to Surge

The Nasdaq fell into correction territory earlier this week, impacting many prominent artificial intelligence (AI) semiconductor stocks. Nevertheless, investment in AI infrastructure is not waning; rather, it is increasing.

The top three cloud computing companies are collectively planning to spend $250 billion on capital expenditures (capex) this year, primarily aimed at AI infrastructure enhancements. Additionally, OpenAI and SoftBank lead a coalition committing $500 billion over the coming years to establish AI data centers through Project Stargate. AI start-ups and major tech firms, including Meta Platforms, which plans to invest up to $65 billion this year, are also expanding AI infrastructure. This significant financial backing will undoubtedly support AI chip manufacturers in the present and future.

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Top AI Chip Stocks to Consider Amid Nasdaq Correction

Let’s explore three promising AI chip companies poised to grow during the current market downturn.

Nvidia

Nvidia (NASDAQ: NVDA) has emerged as the foremost AI chipmaker via its leading graphics processing units (GPUs). With approximately 90% market share, Nvidia excels thanks to its CUDA software platform, designed to extend the usefulness of its chips beyond mere graphics rendering in video games.

Nvidia’s revenue surged as AI became mainstream; its fast-processing chips are essential for training AI models and conducting inferences. The growing complexity of AI models has driven demand for more GPUs. The company has strengthened its software portfolio with libraries, microservices, and tools tailored for AI and high-performance computing. Currently, its chips form the backbone of AI infrastructure.

After a recent sell-off, Nvidia’s stock appears undervalued, trading at a forward price-to-earnings (P/E) ratio under 24 based on 2025 analyst estimates, and boasting a price/earnings-to-growth (PEG) of below 0.5, which typically indicates an undervalued stock.

Image source: Getty Images.

Broadcom

While Nvidia dominates the market for general-purpose AI chips, Broadcom (NASDAQ: AVGO) is establishing a solid presence in custom AI chips. The company specializes in designing application-specific integrated circuits, or ASICs, which are optimized for specific tasks, improving performance while using less power. However, ASICs lack the flexibility that GPUs offer.

After partnering with Alphabet to develop its custom tensor-processing unit (TPU) called Trillium, Broadcom is attracting new clients. It has three established customers, signifying a potential $60 billion to $90 billion available market by its fiscal 2026. This presents a significant opportunity for Broadcom, alongside the expected increase in AI chip spending.

Broadcom is also onboarding four new custom AI chip customers, including Apple. It typically takes about 15 months for custom chip development to deployment, indicating that meaningful revenue from these clients will materialize over the next year and a half to two years. Yet, the momentum for Broadcom in the AI chip sector remains strong.

The company’s stock currently trades at around 28.5 times fiscal 2025 analyst estimates, positioning it attractively given the expansive market opportunities ahead.

Advanced Micro Devices

Advanced Micro Devices (NASDAQ: AMD) holds the No. 2 position in the GPU market behind Nvidia, with a market share around 10%. AMD has successfully captured market share in the central processing unit (CPU) segment within data centers. While GPUs deliver processing power, CPUs function as the operational brain. The data center CPU market may be smaller than the GPU market, but it is still growing, fueled by AI infrastructure expansions.

In its latest quarter, AMD reported over 50% market share for its EPYC CPUs among hyperscalers—companies managing vast data centers. Additionally, it is gaining traction in the personal computer (PC) retail market, claiming over 40% market share on platforms like Amazon, Newegg, and MindFactory.

Amd continues to flourish in the GPU market, with Microsoft and Meta Platforms utilizing its MI300X GPUs, and there is robust interest in the upcoming MI350 series. The company plans to launch its MI400 series in 2026. Although significant gaps exist in software capabilities between Nvidia and AMD, AMD’s chips are finding niche applications in inference, a segment that is gaining traction.

With a forward P/E ratio of only 15, AMD’s stock seems reasonably priced. The company is advancing in the data center with its CPU offerings, while growth in AI spending is expected to positively influence its GPU revenues as well. Thus, AMD is a compelling option to consider buying now.

Considering an Investment in Broadcom?

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Geoffrey Seiler holds positions in Alphabet. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and suggests the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.