Nvidia (NASDAQ: NVDA) has captured the heart of the artificial intelligence (AI) investment trend by providing investors with jaw-dropping growth rates and incredible dominance within the graphics processing unit (GPU) industry. However, challenges are starting to arise within its business (even though it's still dominant), with competitors building up their AI offerings and customers starting to design their own AI chips to train software models.

All of this leads me to believe there's another company that's a better AI investment, Taiwan Semiconductor Manufacturing (NYSE: TSM). Regardless of which AI company you're talking about, it's likely a TSMC customer because TSMC is the world's largest contract chip manufacturer. This means it acts as a fabrication shop for all things chip-related. With massive demand across the board, it's set to benefit whether Nvidia continues its dominance or others knock it from its perch.

TSMC has sat atop the semiconductor throne for a while. It has competitors, but none offer the scale and technology that it does. It can produce the world's smallest and most powerful chip, which has a distance between traces of 3 nanometers (nm). It also has a 2nm chip in development that will significantly improve on the energy efficiency of the 3nm chip, which is fantastic news for companies building out their AI computing power.

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Source Fool.com