Key Points
-
Nvidia’s chips run every major AI model, and even its decade-old Volta chips are still in demand.
-
Broadcom co-designs custom AI chips that are in increasing demand from the biggest AI labs.
-
Cerebras Systems builds massive chips that are designed for speed in running AI applications.
-
Lasting wealth often comes from owning great companies for decades, and the artificial intelligence (AI) build-out could produce a new generation of them. The semiconductor industry can experience ups and downs in demand, but over many years it has produced the kind of growth that can build wealth. Global chip sales were just $126 billion in 1998 and are projected to reach $1.6 trillion in 2026, according to the Semiconductor Industry Association.
Nvidia (NASDAQ: NVDA), Broadcom (NASDAQ: AVGO), and Cerebras Systems (NASDAQ: CBRS) are three top companies driving the innovation that will power the industry forward in the AI era. Here’s why they could be worth buying now and holding for life.
Missed AI’s “Act 1”? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout. Continue »
Nvidia
Nvidia invented the graphics processing unit (GPU), which powers much of today’s AI computing. The stock is up about 19% over the past year, with revenue more than doubling year over year in the second quarter of its fiscal 2026.
The chipmaker’s edge is its deep relationships with leading companies across the cloud market, manufacturing, enterprise, and small cloud companies (neoclouds). At a Goldman Sachs conference in September, CEO Jensen Huang said Nvidia is the only company whose hardware runs every major AI model, including Meta Platforms‘ Muse. This new agentic AI application was trained on Nvidia’s GB300 NVL72 Blackwell Ultra computing system.
Its chips also hold their value. Huang noted that Nvidia’s 10-year-old Volta chips are still rented out. That durability makes its systems long-lived assets, which is why customers are willing to pay high prices for Nvidia’s hardware. The company earns an extremely high profit margin of 64%, indicating a strong competitive position.
At about 14 times next year’s expected earnings, Nvidia stock looks like a bargain for an industry-leading business whose revenue more than doubled last quarter and is expected to increase another 70% in fiscal 2028, based on management’s outlook.
Broadcom
Broadcom designs custom AI chips, Tomahawk networking switches, and VMware software. Its AI chip revenue more than tripled year over year to nearly $17 billion in its fiscal third quarter, ended Aug. 2.
The company designs the custom AI chips for all the leading AI companies. It has worked on every version of Google’s Tensor Processing Unit (TPU) for more than 10 years, and it delivered OpenAI’s first custom chip, Jalapeño. Broadcom’s decades of investment in high-speed data connections and advanced chip packaging have created a competitive edge that is hard to replicate.
That edge matters, as Broadcom delivered OpenAI’s Jalapeño chip in just nine months. Execution and know-how in designing chips reinforce management’s credibility in forecasting that its AI revenue will hit $115 billion in 2027, nearly double the $58 billion expected for fiscal 2026.
The stock is down about 3% over the past year as of Oct. 20, compressing the forward price-to-earnings multiple. At about 11 times fiscal 2028 earnings per share of $30 that management expects, Broadcom stock offers compelling value right now.
Cerebras Systems
Cerebras’ competitive advantage is based on its powerful AI chip, the Wafer-Scale Engine, that is the size of a dinner plate. These giant chips power its AI systems, which are experiencing growing demand. Core cloud revenue grew 287% year over year in the second quarter of 2026, as it benefited from a major deal with OpenAI.
Its chip prioritizes speed and data throughput. This will matter more as the adoption of AI agents grows, with software able to process and complete tasks autonomously. The company says its new CS-4 system is up to 30 times faster than GPU systems.
The stock is down about 32% below its IPO price. This is despite reporting a 75% increase in revenue in 2025 and 74% in the second quarter. The sell-off reflects a rich valuation at the IPO, not business momentum, setting up a buying opportunity for patient investors. Cerebras has $25 billion in future revenue commitments, and management expects core revenue to more than triple in 2027.
This is the riskiest chip stock of the three, since Cerebras is still losing money despite growing revenue. The stock trades at about 32 times this year’s revenue estimates, but that multiple could shrink meaningfully if revenue more than triples in 2027, as management expects. This is a fast-growing innovator in the semiconductor industry that is worth holding for potentially wealth-building gains over the long term.
Should you buy stock in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $361,596!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,303,935!*
Now, it’s worth noting Stock Advisor’s total average return is 910% — a market-crushing outperformance compared to 211% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of October 23, 2026.
John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Broadcom, Goldman Sachs Group, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.
