Artificial intelligence (AI) has turned out to be a tailwind for semiconductor companies in 2023, which isn't surprising as the growing proliferation of this technology has turned around the fortunes of quite a few chipmakers that were earlier facing a downturn on account of weak sales of personal computers (PCs), smartphones, and other consumer-electronic devices.

After all, chips are the crucial building blocks that train complex and large AI models in data centers. They also help run inferencing applications so that the trained models can be put into use for making predictions based on new data fed into the model. The central role that semiconductors are playing in AI deployment explains why the PHLX Semiconductor Sector index has clocked terrific gains of 43% in 2023.

The good part is that this rally seems sustainable for a long time, as the AI chip market is expected to grow at an annual pace of 37% through 2031, generating a whopping $263 billion in annual revenue. Advanced Micro Devices (NASDAQ: AMD) and Intel (NASDAQ: INTC) are two chipmakers that are trying to make the most of this lucrative market. But which one of these two semiconductor stocks should you be putting your money on to take advantage of the AI gravy train? Let's find out.

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Source Fool.com