Many investors are closely watching large tech companies heavily investing in artificial intelligence (AI) infrastructure, questioning when or if these investments will yield adequate returns. While there are concerns about potential cuts or delays in these massive capital spending plans, evidence indicates that spending is continuing and even accelerating. If this trend persists, two major beneficiaries—Nvidia and Taiwan Semiconductor (TSMC)—stand out as top stocks to buy now. Nvidia is a primary recipient of this capital, with its high-end chips powering data centers worldwide. The AI boom has significantly benefited Nvidia and its investors, although the stock has faced pressure due to concerns over potential slowdowns in AI infrastructure spending and regulatory challenges such as export restrictions. However, these concerns may be exaggerated. Jonathan Gray, COO of Blackstone, affirmed strong ongoing demand, which aligns with statements from Nvidia’s major customers like Meta, Microsoft, and Amazon, who plan to maintain or increase their capital expenditures. Export restrictions pose a more immediate challenge, particularly regarding sales to China. Nvidia plans to take $5. 5 billion in charges following earlier export limits and licensing requirements for its H20 AI chip, designed specifically to comply with Chinese export regulations. China remains a key market, contributing 13% of Nvidia’s revenue last year, down from 17% previously, indicating Nvidia’s diversified customer base. Recent reports suggest former President Trump may relax AI chip export curbs just as Biden-era restrictions take effect, though the future regulatory landscape remains uncertain.

Such risks may already be reflected in Nvidia’s stock price. Given these factors, investing in Nvidia still appears prudent, especially after this year’s stock pullback. Investors might also consider Nvidia’s largest supplier, Taiwan Semiconductor (TSMC), a global AI leader. TSMC supplies Nvidia with semiconductors like microprocessors and GPUs, but its diverse clientele spans over 500 customers worldwide. The company has seen soaring demand, with Q1 revenue up 42% and net income and earnings per share soaring 60% year-over-year. Management forecasts nearly 40% revenue growth in the current quarter. Despite this, TSMC shares have declined over 10% year-to-date, leading to an attractive forward price-to-earnings ratio below 20. Both Nvidia and TSMC stocks have been beaten down due to concerns about slowing growth, but customer demand and industry comments suggest the AI surge is not a bubble. Even if data center spending slows, AI software’s broad application across consumer devices and enterprises indicates strong long-term potential. With these perspectives, owning Nvidia and TSMC at recent valuations should provide comfort to most investors.