Nvidia’s (NVDA) stock has surged over 150% since the start of 2024, largely due to AI demand that’s boomed since the launch of ChatGPT. The AI rally has helped the broader market reach more than 37 all-time highs year-to-date. Optimists believe AI will enhance productivity and profits, leading to continued market gains. But skeptics worry about the market's reliance on a few tech giants like Nvidia.

Notably, Nvidia is not the only stock benefitting from the AI boom. Companies like Taiwan Semiconductor Manufacturing Company (TSM) are among the “picks and shovels” associated with the AI rally, as TSMC is responsible for actually manufacturing all the chips sold by Nvidia and other AI giants. Then there are household-name tech giants like Microsoft (MSFT) and Google (GOOG, GOOGL) that are trying to bring AI applications to your home and office. It’s a big, complicated web of different players all trying to stake their claims in the AI market.

Understanding a few key terms about AI will help you suss out what companies are actually saying in their press events and earnings calls and help you make more informed decisions about which stocks you add or avoid when building your portfolio.