Check out Japan's favorite AI stocks
November 21, 2023 Nov 21, 2023, 4:49 pm EST November 21, 2023
Japan is hot on artificial intelligence (AI), and some AI stocks stand to gain more than others. Earlier this month, the Japanese government began planning a whopping $13 billion aid package to develop internal semiconductor manufacturing and advance AI tech. Some of the planned investments, like nearly $4 billion allocated to Japanese chipmaker Rapidus are off-limits to stateside retail investors.
But some AI stocks aren’t.
If you want to follow along with Japan’s unprecedented investment in the sectors, you’d do well to pick these from among Japan’s favorite AI stocks.
Taiwan Semiconductor Manufacturing (TSM)
Source: ToyW / Shutterstock
Taiwan Semiconductor Manufacturing (NYSE:TSM) is the number one AI stock Japan is targeting. The chipmaker is close to completing one manufacturing plant in the country. What’s more, as much as $10 billion of the total aid package will go towards developing a second plant. Beyond basic infrastructure and manufacturing facilities, the aid will go towards helping Japan develop at-home talent in the AI race. A government spokesman for semiconductor development said that the cash could also go towards TSMC training Japanese engineers and joint research projects.
What’s more, TSMC leadership is exploring opportunities to build a third plant in Japan, independent of the current stimulus plan. The joint projects benefit both parties. Japan, of course, gets the economic development and brainpower associated with a robust semiconductor industry enabling AI advances. Likewise, TSMC gets to diversify its geographic footprint and protect against omnipresent threats posed to its home country by China. Overall, if you had to pick one AI stock to follow Japan’s lead, TSM is it.
Source: JHVEPhoto / Shutterstock.com
Intel (NASDAQ:INTC) is in the midst of extending its ongoing operations within Japan, making it the second pick on the list of Japan’s favorite AI stocks. Specifically, Intel is seeking to help Japan expand its reach in three key areas. Those include semiconductor manufacturing, quantum computing and improved manufacturing encompassing the value chain — packaging, assembling and testing.
Earlier this year, Intel was fighting to acquire chipmaker Tower Semiconductor (NASDAQ:TSEM), a company with plants across Japan. While the M&A didn’t pan out, it reinforced Intel’s resolve to help Japan develop at-home capabilities. Intel is particularly bullish on Japan’s advanced packaging prospects. In an interview, CEO Pat Gelsinger said, “As the world moves to embrace advanced packaging, we believe that’s an extremely promising area for Japan to have a much stronger worldwide presence.”
Helping Japan develop this capability benefits Japan, of course. It also provides an important partner for Intel to deploy and ship its assets globally.
I mentioned at the beginning that Japan’s AI stock priority is its private company Rapidus. And, like I said, the overseas chipmaker is off-limits to most retail investors. But buyers who want a piece of the action can invest in IBM (NYSE:IBM) to capture Rapidus’ upside.
IBM and Rapidus are joint partners, moving together to improve Rapidus’ logic scaling technology. Amid all the semiconductor excitement this year, you might forget that IBM was the first to develop a 2-nanometer node chip, which (at the time) performed 45% better with 75% greater energy efficiency than what was on the market then. IBM is a leader in semiconductor stocks, even as they’ve recently fallen out of favor, and the company’s partnership with Rapidus bodes well for both.
Between IBM’s partnership and other AI stock advances we’ve covered, Japan is set to be a semiconductor and AI leader soon. Now is the time to buy Japan’s favorite AI stocks if you want to diversify beyond just Nvidia (NASDAQ:NVDA) and other U.S.-centric companies.
On the date of publication, Jeremy Flint held no positions (directly or indirectly) in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.