Lockheed Martin (LMT +0.52%) is a leading defense stock, but it could face volatility due to some of President Donald Trump's policies. The president recently said that defense companies should not be allowed to do stock buybacks, distribute dividends, or offer executives large salaries.
If that comes to pass, a lack of buybacks and dividends could make Lockheed Martin less appealing. Instead of Lockheed, in 2026 I'd look to Broadcom (AVGO 1.63%), whose AI chips are some of the most sought-after resources on the planet.
AI chips are still hot commodities
Image source: Getty Images.
Most investors have heard a lot about AI chipmakers and how demand seems insatiable. Broadcom's results for its fiscal fourth quarter of 2025 showcased the industry's growth while setting high expectations for fiscal 2026.
NASDAQ: AVGO
Key Data Points
Broadcom's AI semiconductor revenue surged by 74% year over year in the quarter, and CEO Hock Tan told investors that he expects AI revenue to double year over year in the first quarter.
AI models like ChatGPT and Grok have been key AI innovations so far, but with physical AI -- AI that operates in the physical world -- on the horizon, chips will only gain popularity. The emergence of physical AI can revolutionize industries and print some new trillion-dollar companies and segments.
Surgical robots, delivery robots, and self-driving vehicles are some of the many examples of physical AI that will require AI chips like Broadcom's.
The Wi-Fi 8 platform keeps Broadcom at the forefront of the AI boom
Broadcom recently unveiled its Wi-Fi 8 platform, which offers stronger Wi-Fi for consumers who regularly use streaming services, AI-powered apps, and other energy-intensive resources. As AI gets more advanced and takes up more energy and data, people may need to upgrade their Wi-Fi for the best possible experience.
Broadcom's Wi-Fi 8 platform can generate lucrative deals with smartphone makers, service providers, enterprise clients, and Wi-Fi router companies.
It's another part of Broadcom's business that can deliver compelling results on top of its AI chips. This Wi-Fi also makes AI-powered apps more accessible for consumers. As those apps gain more traction, it boosts the demand for Broadcom's AI chips, creating a positive feedback loop.
Broadcom has been one of the top stocks in the market. The AI chipmaker's stock is up by almost 700% over the past five years and looks poised to extend its rally.
