Pinpointing the best-performing artificial intelligence (AI) stock for 2026 is no easy feat. It's impossible to know which companies will launch innovative features, or if 2026 will be a year of buildout. Investors only have a bit of information about what to expect in 2026, and using that tidbit to their advantage is the best that they can do.
What piece of information can clue investors into 2026's future? Spending projections from the AI hyperscalers.
In 2025, this cohort set a new record for how much they spent on data center capital expenditures. Many of these companies have already informed investors that 2026 will be a year of further growth on 2025's levels. This should immediately benefit companies like Nvidia (NVDA 1.53%), AMD, or Broadcom. But it will be difficult to know which will be the best performer in 2026. Any one of them could announce a new product or partnership that turns the AI investing world on its head.
However, there's one company that will benefit regardless of which company mentioned above is in vogue in the computing world: Taiwan Semiconductor Manufacturing (TSM 4.96%). TSMC, as it is also known, manufactures nearly all of the best-performing chips possible for its clients, which include the three listed. That means TSMC is in a great position to thrive in 2026, and I think it could be the best performer.
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TSMC is primed to thrive over the next few years
Nvidia, AMD, and Broadcom are all fabless chip companies, which means they design the chips, but they don't manufacture them in-house. Instead, they farm that production work out to various companies, including TSMC on the chip side. TSMC has thrived on this relationship, as it allows it to sell to competitors with no repercussions. As long as there is heightened demand for chips, TSMC will continue to do well.
2026 is expected to see a higher demand for chips than any year prior, so this trend is alive and well. And next year isn't expected to be the end, either. Nvidia projects that global data center capital expenditures will rise from $600 billion in 2025 to $3 trillion to $4 trillion by 2030. That's a bold projection. But the leadership in these companies has more information than individual investors.
NYSE: TSM
Key Data Points
During its Q3 earnings release, Nvidia noted that it's "sold out" of cloud graphics processing units (GPUs). Companies are having to place their orders years in advance for computing units that haven't been released yet. This provides Nvidia's management team with insight into multiple years' worth of growth, providing backing for its projections. While the exact dollar figure may not pan out, the direction is likely right.
TSMC is in a key position to provide chips for this massive market, placing it in an excellent spot to thrive. Even if Nvidia's dominance slips and a different company like AMD or Broadcom steals market share, TSMC will still maintain its role as a chip provider, allowing it to benefit regardless of which company is leading the computing unit industry.
Taiwan Semiconductor is launching a new technology
There is, however, one issue that could derail the whole buildout. Data centers consume a ton of energy. This is placing a serious strain on the power grid and could become the limiting factor in the AI buildout. TSMC recognizes this and is working with chip designers to develop next-generation chips that take on the power consumption issue. TSMC has the production capacity to handle 2-nanometer chips that consume 25% to 30% less power than their previous chip designs when configured to run at the same speed.
TSMC's ability to make subsequent chip generations is targeting further power consumption improvement as well. This manufacturing ability isn't going to come cheap, and it will allow TSMC to grow its revenue at a rapid pace over the next few years, which bodes well for the stock.
I'm not sure which chip designer will be best in 2026, but I know that TSMC is positioned to thrive regardless. This places Taiwan Semiconductor Manufacturing on my short list for stocks that could be the best performer in 2026, and investors might want to give serious consideration to buying now so as to capture the upside of the AI buildout without the risk of needing a single company to maintain its dominance.
