The new year is right around the corner, and it's time to start looking at which stocks are strong buys. Two that I think have the potential to deliver impressive returns are Alphabet (GOOG 1.63%) (GOOGL 1.39%) and Taiwan Semiconductor Manufacturing (TSM 4.36%).
Each of these stocks has had a strong 2025, and looking into 2026, each is positioned for success.
Image source: Getty Images.
1. Alphabet
Few stocks have done as well in the second half of 2025 as Alphabet. It has risen more than 80% since July 1 and has been powered higher by positive announcements on court cases, artificial intelligence (AI) success, and the potential launch of a new business unit.
The company used to be the laughingstock of the AI world after it was beaten to the punch by several competitors in launching generative AI platforms. However, that's no longer the case. OpenAI, the maker of ChatGPT, recently declared a "code red" regarding Alphabet's surge in the technology.
This shouldn't surprise anyone, since Alphabet has resources that OpenAI could only dream of. And it is using much cheaper computing than OpenAI, so it can make these advances at a lower cost.
NASDAQ: GOOGL
Key Data Points
The secret to Alphabet's cost efficiency is its tensor processing units (TPUs), which excel at running a specific workload type, while graphics processing units (GPUs) from Nvidia can run multiple types of workloads.
However, when a computing device only sees one type of workload in its service life, TPUs can deliver better performance at a lower price point. Because Alphabet designed the TPU in collaboration with Broadcom, it doesn't have to pay Nvidia a huge premium to use its GPUs. This has allowed Alphabet to build a computing infrastructure that's far larger than many of its peers, and at a lower cost.
For companies to access TPUs, they have to rent them through Google Cloud's computing service. But that could be changing.
Meta Platforms and Alphabet have reportedly been in talks to sell TPUs to Meta, which would be a huge shift in strategy. This would open up a brand-new division for Alphabet and could lead to huge growth, especially if other companies purchase its TPUs.
Time will tell if this part of the business takes off, but I've seen enough to know that Alphabet will likely be a hugely successful investment in 2026.
2. Taiwan Semiconductor
Regardless of whether Alphabet becomes the AI computing leader or Nvidia retains its crown, these companies have to procure their chips from somewhere.
Most of the major providers in the AI race are fabless chip companies, meaning they design the chips but outsource the manufacturing. The majority of chips come from Taiwan Semiconductor (or TSMC) since it's the leader in its space and generates the most revenue.
This has been a banner year for TSMC, and it has posted incredible growth each quarter.
TSM Revenue (Quarterly YoY Growth) data by YCharts; YoY = year over year.
As long as AI spending stays elevated, there will be heightened demand for TSMC's chips. With all of the AI hyperscalers announcing record-setting capital expenditures in 2026 on top of records set in 2025, the TSMC bull case appears to be alive and well.
That trend is also expected to persist for many years. Nvidia expects global capital expenditures on data centers to reach $3 trillion to $4 trillion by 2030. If that pans out, we're going to need a lot of chips to power all of the workloads. That will boost TSMC's business, making it a great stock in 2026 and beyond.
