AMD is struggling to gain ground on Nvidia in the GPU space.
Alphabet’s TPUs, which it designed in partnership with Broadcom, could become the next hot computing units on the market.
All of these companies source most of their most powerful chips from Taiwan Semiconductor.
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2023, 2024 and 2025 have been great years to invest in the field of artificial intelligence (AI). Now that 2025 is almost over, the question is: will there be more of the same in 2026? Concerns are intensifying about whether the huge sums of money being spent to develop AI computing capacity will pay off. Investors are beginning to clamor for real returns on those investments, and to date there have been none.
That hasn’t stopped AI hyperscalers from continuing to add massive amounts of computing power to their footprints. In 2025, hyperscalers set records for capital expenditures and most of that money went into data centers. All of them also point to even higher capex in 2026.
While investors may see some risks in the amount of money being spent on AI infrastructure, there are several ways to profit from this trend.
Image source: Getty Images.
Chip designers like NVIDIA(NASDAQ: NVDA) and amd(NASDAQ:AMD)that supply high-end processors to power AI, are among the sector’s top stock picks. These two make graphics processing units (GPUs), which excel at quickly handling AI workloads due to their ability to break down certain types of complex calculations into many smaller ones and handle those pieces in parallel.
Nvidia has been the leading AI stock since ramping up infrastructure spending in early 2023, and the success of its best-in-class technology stack has made it the world’s largest company.
AMD was playing second fiddle to Nvidia before the AI megatrend took off, and it still is. It certainly hasn’t had the same level of success with its products. But the tide could be turning as its offerings become more competitive and AI hyperscalers are more seriously looking for cheaper alternatives to Nvidia chips. If AI hyperscalers decide they want to be more budget-conscious on the infrastructure front, they could spend less money for the same amount of computing power, or the same amount of money for more, by switching to AMD chips.
That’s one reason AMD’s products could become more popular in the coming years, and management recently told investors that it anticipates a 60% compound annual growth rate for data center revenue over the next five years.
Another specialized IT provider is Broadcom(NASDAQ:AVGO). Broadcom does not market its own computing units. Instead, it goes directly to the AI hyperscalers and designs compute units in collaboration with them to meet their needs. Because you design each chip with a specific type of workload in mind, you can maximize performance and decrease costs by decreasing its flexibility. Several AI hyperscalers have partnered with Broadcom for this work, including Alphabet(NASDAQ:GOOG)(NASDAQ:GOOGL).
Alphabet’s custom AI accelerator is the Tensor Processing Unit (TPU), which it has used for internal processing and has also made available to customers for rental through its cloud computing service, Google Cloud. However, Alphabet may be emerging as a force to be reckoned with in this landscape. Alphabet is reportedly considering a deal to sell a quantity of TPU directly to Metaplatforms(NASDAQ: META)which would represent a change from its current model of installing them only in its own data centers. If you decide to sell TPU, Meta could be just the first interested buyer.
Time will tell what kind of ripples Alphabet makes in this industry, but these four stocks look like excellent buys right now, considering how much money is being spent on AI infrastructure. Buying all four would be a smart strategy because it’s impossible to know which company will perform the best in the coming years. However, at least one company is likely to do well, regardless of which company is the leader in the AI chip space a few years from now.
All of these companies are “fabless” chip makers, meaning they design chips, but don’t manufacture them. Instead, they outsource that work to several different companies. However, most high-end chips made today come from a foundry operator: Taiwan SemiconductorsManufacturing(NYSE: TSM). Taiwan Semiconductor is the world’s largest chipmaker by revenue and is a neutral player in the AI chip competition.
So as long as there is increased spending on AI computing power, TSMC will surely benefit. That makes it an obvious investment. It may not be the best performance of this group of five in 2026, but it should easily be the second or third best.
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Keithen Drury has positions in Alphabet, Broadcom, Meta Platforms, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool positions and recommends Advanced Micro Devices, Alphabet, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
Learn My Top 5 Artificial Intelligence (AI) Stocks for 2026 Originally Posted by The Motley Fool
