They say the future is coming, and it will be powered by artificial intelligence. A lot of money – $1.4 trillion, give or take – is being tossed at this future, mostly in the form of data centers and the chips that fill them. Gartner, those folks who keep track of these things, expect a jump of nearly 42% in spending this year. It’s a predictable sort of madness, really. We build things, then we need more things to power the things we built. So it goes.
Two companies seem poised to benefit, at least for a while. Not because they’re particularly good, or virtuous, but because they’re in the right place at the right time. It’s rarely about merit, you see. Mostly just luck. And a lot of silicon.
Taiwan Semiconductor Manufacturing: The Pick-and-Shovel Play
Semiconductors. The building blocks. Taiwan Semiconductor Manufacturing, or TSMC, makes them. A lot of them. Nvidia, Broadcom, Qualcomm, AMD, Marvell, even Intel… they all send their designs to TSMC to be actually made. It doesn’t much matter which of these companies wins the AI race, because TSMC gets paid either way. A sort of quiet victory, isn’t it? No parades, just steady profit.
They’re predicting a revenue increase of around 30% this year, which is quite a number. And they might even raise prices. A 3% to 10% increase on these advanced chips. It’s the usual story: demand exceeds supply, and those who control the supply get to name the price. Analysts think earnings will jump by 34%, but that could be low. Last year they jumped 51%. It’s a good business, making things people desperately need. Though what they’ll do with all this processing power… that’s another question entirely.
Alphabet: More Chips, More Problems?
Alphabet, formerly Google, is mostly known for advertising. Selling your attention, mostly. But they’re also getting into the chip business. They’ve developed something called Tensor Processing Units, or TPUs. Fancy name, but it’s just a chip. And apparently, it’s a good one. AI companies are starting to want them.
They’ve made a deal with Anthropic, another AI company, to supply up to a million of these TPUs. That’s a lot of chips. Anthropic says it’s worth tens of billions of dollars. Building a data center costs around $50 billion, and 70% of that goes to the chips. So, Alphabet stands to make a tidy sum.
Meta, Facebook, is also reportedly talking to Alphabet about using these TPUs. Morgan Stanley estimates that Alphabet could see an 11% increase in revenue and a 3% increase in earnings per share for every 500,000 TPUs sold. They’re already expecting a 7% increase in earnings, so that’s a potentially significant bump. The stock is up 65% in the last year. It’s all a bit dizzying, isn’t it? All this growth. All this… stuff.
Of course, it all depends. It always does. A change in the weather, a new invention, a sudden loss of interest… any number of things could derail these predictions. But for now, these two companies look reasonably well positioned. Or, as reasonably well positioned as anyone can be in this increasingly absurd world. So it goes.
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2026-01-29 14:32