As 2025 nears its end, investors are starting to think about which stocks will be 2026's top performers. These stocks often rally to end the year, as portfolio managers start to move funds into these stocks, which can drive the price up. This creates what's known as a Santa Claus rally, and it can give investors a nice boost on their investment if they get in early.
Three stocks that I think will be popular picks for 2026 are Nvidia (NVDA +1.16%), Taiwan Semiconductor (TSM +1.92%), and Alphabet (GOOG 2.65%) (GOOGL 2.60%). Scooping up shares of these genius stock picks now will provide investors the best returns possible.
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1. Nvidia
Nvidia has been the top stock pick in the market over the past three years, thanks to its industry-leading graphics processing units (GPUs) computing stack. A large chunk of the generative AI technology we experience today is run on Nvidia's GPUs, although that dominance is being questioned.
NASDAQ: NVDA
Key Data Points
Competing products from rival AMD, as well as custom AI accelerators from companies like Alphabet designed in collaboration with Broadcom, are challenging Nvidia's dominance. However, Nvidia CEO Jensen Huang noted in its Q3 earnings release that they are "sold out" of cloud GPUs. The narrative that Nvidia is losing its edge isn't compatible with that statement, and investors should view other companies exploring alternative AI computing devices as looking for ways to increase the amount of computing capacity they can purchase immediately.
This keeps the artificial intelligence (AI) buildout bull case alive and well for Nvidia, making it a strong stock pick for 2026.
2. Alphabet
Alphabet's tensor processing unit (TPU) was developed in-house in collaboration with Broadcom, and Meta Platforms could be one of the first outside customers actually to own them. Previously, the only way to access these devices was through Google Cloud.
With Alphabet considering selling directly to Meta, it may not need to go through Alphabet's cloud computing platform. This could open up a brand-new revenue stream for Alphabet that isn't accounted for.
NASDAQ: GOOGL
Key Data Points
Even without this potential new revenue stream, Alphabet is doing excellently despite its business maturity. In Q3, revenues rose 16% year over year to $102 billion, with diluted earnings per share (EPS) increasing at a 35% year-over-year pace.
Alphabet's stock has been an amazing performer in the second half of the year. However, I think there is still room to rise, especially if Alphabet gets some big business wins with its TPUs and its existing businesses continue to perform well.
3. Taiwan Semiconductor Manufacturing
One of the unsung heroes of the AI race is Taiwan Semiconductor Manufacturing, known as TSMC.
Nvidia and Alphabet may design computing units, but they don't have the capabilities to fabricate the chips in-house. Instead, the work is outsourced primarily to TSMC, the world's largest chip manufacturer by revenue. Without TSMC, AI technology wouldn't be where it is today, and it's solving a future problem already with its latest technology release.
NYSE: TSM
Key Data Points
TSMC's 2-nanometer chips are entering production, and the efficiency improvements cannot be understated. When configured to run at the same processing speed as the previous 3nm generation, these chips consume 25% to 30% less energy.
Electricity capacity is becoming a huge issue in the AI buildout. If TSMC's chips live up to their energy-efficient promises, it could allow the AI buildout to continue at its previously planned pace.
Because TSMC is a neutral party in the chip world, it will benefit as long as there is increased spending on AI infrastructure. With the AI hyperscalers all announcing record-setting data center capital expenditure plans for 2026, this thesis is alive and well. As a result, TSMC is a top stock pick for 2026, as it doesn't matter whose computing units are being used; chances are, the chips originated from TSMC's facilities.
