It's no secret that artificial intelligence (AI) is a booming industry. As a result, many investors are searching for AI stocks that could make them millionaires.
While you're unlikely to find a single stock pick that will accomplish the goal, adding these two AI stocks to a well-diversified portfolio will certainly set you up for the best possible outcome.
Taiwan Semiconductor (NYSE: TSM) is the world's largest contract semiconductor manufacturer. Among its clients are practically every company creating AI technology -- its chips are used in products like graphics processing units (GPUs) made by Nvidia (NASDAQ: NVDA) and AMD (NASDAQ: AMD), which are vital for creating AI models.
With all roads leading to Taiwan Semiconductor, it seems like a no-brainer investment. But being so large also has its drawbacks. AI chips aren't the lion's share of TSMC's revenue right now. Instead, personal electronics (like laptops) and smartphones (Taiwan Semiconductor supplies the chips for Apple's (NASDAQ: AAPL) iPhone) generate most of the demand, and these areas are weak this year thanks to a struggling consumer.
However, Q3 showed signs of this trend reversing. Smartphone revenue grew 33% quarter over quarter in Q3, with high-powered computing growing 6%.
But when demand for devices like laptops picks up alongside smartphone demand, Taiwan Semiconductor will be well-positioned to take advantage of the boom. Throw in growing AI chip demand, and you have a recipe for a fantastic growth stock.
However, Taiwan Semiconductor isn't valued like a growth stock.
With the stock trading at 18 times trailing earnings, it looks like an absolute bargain at these prices.
UiPath's (NYSE: PATH) product is centered around robotic process automation (RPA), not AI. So why is it on this list of AI stocks that could help make you a millionaire? UiPath's integration of artificial intelligence with its RPA software makes the base product more potent and flexible.
RPA software allows its users to automate repetitive tasks, like filling out a bill of sale or running a report. However, when AI is introduced, it upgrades the product by allowing it to understand legal documents, sift through emails to find customer information, or monitor employees to pinpoint which processes might be candidates for process automation.
This integration of AI with RPA is why Polaris Market Research believes the RPA market opportunity could explode from $2.7 billion in 2022 to $66 billion by 2023. With UiPath's annual recurring revenue (ARR) totaling $1.3 billion in Q2 of FY 2024 (ending July 31) and growing at a 25% pace, UiPath is well on its way to dominating this industry.
With the stock only trading for nine times sales, it's fairly priced and well-positioned to be a portfolio star over the next decade.
Neither one of these two stocks on their own will make you a millionaire (unless you've got almost a million dollars already), but they are slated to beat the market over the long term. You can accelerate your path to becoming a millionaire by consistently investing each month into the market in a portfolio of stocks from all industries.
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Keithen Drury has positions in Taiwan Semiconductor Manufacturing and UiPath. The Motley Fool has positions in and recommends Advanced Micro Devices, Apple, Nvidia, Taiwan Semiconductor Manufacturing, and UiPath. The Motley Fool has a disclosure policy.