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This FTSE 100 fund has 17% of its portfolio in these 3 artificial intelligence (AI) growth stocks.

Scottish Mortgage Investment Trust One is FTSE 100 A fund that aims to invest in the world’s largest growth stocks. Naturally, many of these are directly related to artificial intelligence (AI).

In fact, as of March 31, the trust invested around 17% of its portfolio in the following three AI stocks.

Golden GPUs

First is Nvidia (NASDAQ: NVDA). After an incredible 194% gain in just one year, the chip firm currently comprises 8% of the trust’s assets.

Companies like Meta, AmazonAnd Microsoft-Backed OpenAI (creator of ChatGPT) needs thousands of Nvidia graphics processing units (GPUs) to train and run its creative AI products.

Originally designed to enhance computer game graphics, GPUs are specialized processors that specialize in processing large amounts of data simultaneously.

This makes them ideal for machine learning and a wide range of applications, including generative AI, robotics, and self-driving vehicles.

No wonder Scottish Mortgage called NvidiaOne of the foundational companies for the digital age

This is not hype. In its last financial year (which ended in January), the firm reported revenue of $60.9bn, an incredible 126% year-on-year increase. Meanwhile, net profit rose 286 percent to $32.3 billion!

Looking ahead, one potential threat is that all tech companies are developing their own custom AI chips, while facing direct competition. Advanced Micro Devices.

Even so, the trust’s managers believe Nvidia has the competitive edge and smart leadership to stay on top.

A unique company

Another is AI-related stocks, which also account for 8% of assets. ASML (NASDAQ: ASML).

Now, this company does not make or design semiconductors. Instead, it sells lithography systems that draw geometric patterns on silicon wafers to trace how microchips work.

ASML is the sole supplier of the machines needed to build the world’s most advanced AI chips. Hence it has the characteristics of a monopoly.

Its next-generation ‘High NA EUV’ machines are about the size of a double-decker bus and cost about $350 million each. So it’s not the kind of stuff you’d find at your local industrial estate.

Not surprisingly, its main customers are the world’s top chip foundries: Intel, SamsungAnd Taiwan Semiconductor Manufacturing Company (TSMC). Two of them accounted for more than half of its sales last year, so there is a risk of customer concentration here.

That said, ASML’s machines should be in high demand as the West builds more foundries to diversify chip manufacturing away from Asia.

Everyone’s foundry

Speaking of TSMC, it is the latest addition to the Scottish mortgage portfolio. This represents about 1% of assets.

On April 18, TSMC’s chief executive said:Almost all AI innovators are working with TSMC to meet the insatiable demand for AI.

Unlike rivals Samsung and Intel, the firm does not compete with any of its customers. Hence why it makes most of the world’s AI chips. And in short it is a case of investment.

The main risk is an increase in Taiwan-China tensions, which could lower share prices.

Stupid takeaway.

In essence, ASML provides the machines TSMC needs to build advanced AI chips for the likes of Nvidia.

Scottish mortgage shares provide investors with a way to invest in the ongoing AI boom. They may be volatile, but they are also trading at a 10% discount to the trust’s net asset value. I think it’s a bargain.

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