When it comes to artificial intelligence (AI) investing, many people think of high-growth stocks, but while these stocks can add excitement to a portfolio, they often also come with unsettling volatility.
Luckily, there's another way to profit from the AI boom. A select few companies are cashing in on the growing demand for AI products and services, and returning soaring profits to shareholders through dividends. Here are the top two AI dividend stocks to buy right now.
#1 AI Dividend Stock to Buy: Taiwan Semiconductor Manufacturing
NVIDIA Its stock price is soaring, and rightly so: The semiconductor giant's cutting-edge chips are powering cutting-edge AI applications, but Nvidia only designs those chips. Taiwan Semiconductor Manufacturing (NYSE:TSM) Actually build it.
The company known as TSMC is the global leader in semiconductor foundry services, with a 62% market share, according to technology research firm Counterpoint Inc. The chipmaker's share of the most advanced chips is even more impressive, with some estimates putting it at as much as 90%.
TSMC manufactured 11,895 products for 528 customers in 2023. Key end markets include smartphones, AI-centric computing, Internet of Things (IoT) devices, automotive technology and consumer electronics. Customers include many of the technology giants, such as: appleNvidia, and Tesla.
TSMC has a symbiotic relationship with its customers: As these highly successful companies grow, TSMC grows with them. This win-win partnership has helped the chip leader grow its revenue and profits by more than 17 percent every year since going public in 1994.
This impressive earnings growth has prompted strong cash returns to shareholders: TSMC hasn't cut its dividend since it began rewarding investors with cash payouts in 2004. The company's shares currently boast a solid dividend yield of 1.2%.
Even better, TSMC is poised for even stronger growth over the next few years: The company's revenue grew 30% in May, driven by surging demand for AI chips.
#2 AI Dividend Stock to Buy: Microsoft
If you want to add a dividend-paying AI giant to your portfolio, Microsoft (Nasdaq: MSFT)The tech giant is one of the most profitable companies on the stock market today, and the AI boom is expected to fuel its growth.
Microsoft has made a bold move to secure its position as OpenAI's exclusive cloud computing platform in early 2023. Its multi-billion dollar investment in ChatGPT developers has put Microsoft at the forefront of the AI race, and the software giant is moving aggressively to secure its leading position.
Microsoft has been quick to add AI-powered “Copilot” to its popular software products. Copilot in Microsoft 365 can draft emails in Outlook, suggest formulas in Excel spreadsheets, and take meeting notes in Teams. These AI-powered productivity tools are being widely adopted by businesses. CEO Satya Nadella said during the company's earnings call on April 25 that nearly 60% of Fortune 500 companies are already using the Copilot service.
Additionally, surging demand for AI services is causing Microsoft's Azure cloud infrastructure platform to expand at a faster pace. More than 65% of Fortune 500 companies are using the company's Azure OpenAI services to build custom-generated AI applications. Microsoft's total revenue rose 17% to $62 billion in the quarter ended March 31, driven by a 31% surge in revenue from Azure and other cloud services.
After all, the tech giant's net income rose 20% to $22 billion in the most recent quarter, and Wall Street expects the good times to continue. Microsoft is expected to grow its earnings by more than 16% annually over the next five years. Those AI-driven gains should translate into bigger dividends and wealth-building total returns for investors who buy Microsoft stock now.
Should I invest $1,000 in Microsoft right now?
Before you buy Microsoft stock, consider the following:
of Motley Fool Stock Advisor The analyst team Top 10 Stocks Here are the stocks investors should buy right now… Microsoft isn't one of them. These 10 stocks have the potential to generate huge profits over the next few years.
Things to consider NVIDIA This list was created on April 15, 2005…If you invested $1,000 at the time of recommendation, That comes to $802,591.!*
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The article 2 Artificial Intelligence (AI) Dividend Stocks to Buy for the Next 10 Years was originally published by The Motley Fool.
