Semiconductor stocks have taken off in 2023 thanks to artificial intelligence (AI) as chips are playing a mission-critical role in the proliferation of this technology in multiple ways. This explains why the PHLX Semiconductor Sector index has recorded impressive gains of 37% so far this year.

Training large AI models requires a lot of computing power, which is currently provided by graphics processing units (GPUs) and central processing units (CPUs). Similarly, AI servers need fast memory for both storage and computing. All this explains why the market for AI chips is expected to grow from just $15 billion last year to almost $384 billion a year in 2032, according to Allied Market Research.

Not surprisingly, investors have been piling into AI stocks such as Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD) this year. While Nvidia stock has surged a massive 220% in 2023, AMD is up 70%. This huge difference between the performances of these two AI stocks isn't surprising as Nvidia is already delivering outstanding growth thanks to the huge demand for its AI chips, while AMD's products have yet to gain traction.

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Source Fool.com