Nvidia Drives Chip Stocks While Apple iPhone 17 Boosts Sales

The artificial intelligence sector continues to demonstrate robust growth and investor confidence, with several companies reporting significant gains and strategic expansions. Taiwan Semiconductor Manufacturing Company (TSMC) recently reported a record-breaking quarter, showcasing an impressive 35% profit increase, marking its eighth consecutive quarter of growth. This performance has significantly bolstered investor faith in the enduring power of AI, benefiting key customers like Nvidia and driving chip stocks higher. Companies specializing in AI infrastructure and components are experiencing substantial demand. Lumentum Holdings, for instance, saw its stock price jump an impressive 328% over the last year, with the company forecasting $650 million in revenue for its fiscal second quarter, largely driven by its optical and photonic components used in AI. Similarly, Micron Technology's stock climbed, fueled by accelerating demand for memory in AI systems. Micron plans a massive $200 billion investment to boost production capacity in the U.S., anticipating a memory shortage to persist into 2027. Major tech giants are also heavily invested in the AI surge. Meta Platforms is pouring resources into AI, leading to strong financial results and deeper user engagement across its vast user base. Apple's new iPhone 17, with its integrated AI features, is driving strong sales and double-digit revenue growth, further expanding its extensive device ecosystem. Microsoft, a significant player in AI, is investing in large data centers, which in turn highlights a growing demand for water for cooling, creating new investment opportunities in water-related stocks and ETFs. Beyond the giants, specialized AI firms are thriving. Palantir Technologies reported a 63% jump in Q3 revenue to $1.18 billion, with its U.S. commercial segment growing 121% year-over-year, demonstrating strong customer commitment. Vertiv, valued at $65.3 billion, provides critical infrastructure like thermal control for data centers, reporting a $9.5 billion backlog and collaborating with Nvidia. Even quantum computing, represented by IonQ, shows promise, with its stock growing 35% annually over five years, offering solutions to potentially cut data center energy use by 12.5%. Investors looking for opportunities beyond individual stocks might consider recommended ETFs. These include the Allspring LT Large Growth ETF, the Invesco NASDAQ Internet ETF, and the First Trust Dow Jones Internet Index Fund, all rated "Outperform" with potential for at least 10% growth. The First Trust Water ETF (FIW) also presents a compelling long-term portfolio addition, given the increasing water demands of AI data centers.

Key Takeaways

• Lumentum Holdings stock surged 328% in the past year, forecasting $650 million in Q2 revenue, driven by high demand for its optical and photonic components in AI infrastructure.
• Micron Technology's stock rose significantly due to accelerating AI memory demand, with the company planning a $200 billion investment to increase U.S. production capacity.
• Taiwan Semiconductor Manufacturing Company (TSMC) reported a record quarter with a 35% profit increase, boosting confidence in AI stocks and benefiting customers like Nvidia.
• Meta Platforms is investing heavily in AI, leading to strong financial results and deeper user engagement across its 3.5 billion daily active users.
• Apple's new iPhone 17, featuring AI capabilities, is driving strong sales and double-digit revenue growth, enhancing its ecosystem of over 2 billion devices.
• Broadcom provides essential high-performance networking chips and custom AI accelerators for data centers, positioning it as a strong AI investment.
• Palantir Technologies saw its Q3 revenue jump 63% to $1.18 billion, with its U.S. commercial segment growing 121% year-over-year.
• Vertiv, valued at $65.3 billion, provides critical data center infrastructure and is collaborating with Nvidia, reporting a $9.5 billion backlog.
• IonQ, a quantum computing company, has seen 35% annual stock growth over five years, offering solutions to potentially reduce AI data center energy use by 12.5%.
• Microsoft's investment in large AI data centers highlights a growing demand for water for cooling, creating new investment opportunities in water-related stocks and ETFs like the First Trust Water ETF.

Lumentum AI Stock Soars 328 Percent in One Year

Lumentum Holdings, a company specializing in networking components, saw its stock price jump an impressive 328% over the last year. The company expects strong revenue and earnings growth, driven by high demand for its optical and photonic components used in AI infrastructure. For its fiscal second quarter, Lumentum forecasts $650 million in revenue and $1.40 adjusted earnings per share. With over 60% of its revenue coming from the cloud and AI market, analysts believe the stock could climb higher, potentially reaching $455.

Lumentum AI Stock Jumps 328 Percent in One Year

Lumentum Holdings, a company that makes networking parts, saw its stock price increase by 328% in the past year. The company expects strong growth in sales and profits, thanks to high demand for its optical and photonic parts used in AI. For its second fiscal quarter, Lumentum predicts $650 million in revenue and $1.40 in adjusted earnings per share. With more than 60% of its income from the cloud and AI market, experts think the stock could rise further, possibly to $455.

Two AI Stocks to Buy and One to Avoid in 2026

Investors should consider buying Meta Platforms and Apple stock for AI growth in 2026, but avoid Recursion Pharmaceuticals. Meta Platforms is investing heavily in AI, leading to strong financial results and deeper user engagement across its 3.5 billion daily active users. Apple's new iPhone 17, with its AI features, is driving strong sales and double-digit revenue growth, boosting its large ecosystem of over 2 billion devices. Recursion Pharmaceuticals, a small drugmaker using AI for drug discovery, has not yet seen its efforts pay off.

Micron Stock Rises on Strong AI Memory Demand

Micron stock climbed 6% on Friday and is up 52% over the last month, driven by high demand for memory in AI systems. CEO Sanjay Mehrotra stated that AI-driven demand is accelerating and expects the memory shortage to continue into 2027. Micron plans to invest $200 billion to increase production capacity in the U.S., including new facilities in Idaho and Clay, New York. The company also saw stronger-than-expected growth in server memory and PC storage.

Consider Broadcom and TSMC for AI Investments

Investors should consider Broadcom and Taiwan Semiconductor Manufacturing Company TSMC as strong AI investments, potentially alongside Nvidia. Broadcom provides essential high-performance networking chips and custom AI accelerators for data centers, crucial for connecting AI computations. TSMC, the world's largest contract chipmaker, produces advanced semiconductors, including Nvidia's GPUs, and holds a near-monopoly in this vital part of the AI supply chain. Both companies play critical roles in the AI ecosystem and are set for significant growth as AI technology advances.

IonQ Quantum Stock Could Soar with AI Demand

IonQ, a quantum computing company, has seen its stock price grow 35% annually over the last five years. Quantum computing offers a solution to AI's growing energy needs, potentially cutting data center energy use by 12.5% and carbon emissions by 10%. This technology allows for faster and more efficient AI training and operations. IonQ sells quantum computing hardware and provides access to its machines through a cloud service. In Q3 2025, the company reported $39.9 million in revenue, a 222% increase from the previous year.

Vertiv and Palantir Emerge as Top AI Stock Winners

Vertiv and Palantir Technologies are showing strong potential as leading AI stocks. Vertiv, valued at $65.3 billion, provides critical infrastructure like thermal control and power for data centers, reporting a $9.5 billion backlog and 63% year-over-year adjusted EPS growth in Q3. The company is increasing R&D and collaborating with Nvidia. Palantir Technologies, with a market cap over $420 billion, saw its Q3 revenue jump 63% to $1.18 billion, driven by strong government and commercial growth. Its U.S. commercial segment grew 121% year-over-year, showing significant customer commitment.

Water Stocks and ETFs Benefit from AI Data Centers

AI data centers require a lot of water for cooling, making water a new valuable resource in the tech industry. Microsoft, a major AI company, is investing in large data centers and emphasizing community benefits. This growing demand for water suggests a new investment opportunity in water-related stocks and ETFs. The First Trust Water ETF FIW, for example, shows strong momentum and could be a good long-term portfolio addition.

AI Analyst Recommends Three Top ETFs for Investors

An AI analyst from TipRanks has identified three exchange-traded funds ETFs that are rated "Outperform" and show potential for at least 10% growth. These recommended ETFs include the Allspring LT Large Growth ETF, the Invesco NASDAQ Internet ETF, and the First Trust Dow Jones Internet Index Fund. Investors looking for promising opportunities in the market might consider these options.

Taiwan Semiconductor Success Boosts Faith in AI Stocks

Taiwan Semiconductor Manufacturing Company TSMC reported a record-breaking quarter, increasing investor confidence in AI stocks. CNBC's Jim Cramer noted that TSMC's 35% profit increase, its eighth consecutive quarter of growth, silenced skeptics about AI's lasting power. The company sees strong demand for its advanced AI chips, which also signals good business for customers like Nvidia. Following this news, chip stocks, including TSMC and Nvidia, led the market higher on Thursday.

Sources

• This Artificial Intelligence (AI) Stock Has Jumped 328% in 1 Year. It Can Soar Higher After Feb. 3. (Hint: It's Not Palantir.)
• This Artificial Intelligence (AI) Stock Has Jumped 328% in 1 Year. It Can Soar Higher After Feb. 3. (Hint: It's Not Palantir.)
• 2 AI Stocks to Buy in 2026, and 1 to Avoid
• Micron stock climbs as CEO highlights AI demand for memory
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• 3 Best ETFs to Invest In, According to AI Analyst, 1/16/2026
• Taiwan Semiconductor's record quarter renewed investors' faith in AI stocks, Jim Cramer says