Although investors have been told that spending on artificial intelligence (AI) is going to ramp up again in 2026, some are getting a bit weary of the AI trade. However, they must realize that this is a generational investment opportunity and that they should stay exposed to this trend, because there is a significant amount of money being spent on AI computing power.
While we're still waiting to see a return on investment for companies deploying generative AI technology, several are already making a ton of money from it. These AI hardware providers include Nvidia (NVDA 1.21%), Broadcom (AVGO 1.15%), Advanced Micro Devices (AMD 3.13%), and Taiwan Semiconductor Manufacturing (TSM 4.36%). These four are excellent investment picks for 2026, and I think investors should load up on them.
Image source: Getty Images.
The AI hardware race is heating up
Nvidia, Brodacom, and AMD are all competing with one another. Nvidia is the leader in the space, and its graphics processing units (GPUs) have been the go-to chips since AI spending kicked off in 2023. They are so popular that its management said in its third-quarter results that it was sold out of cloud GPUs. That's a feat that underscores the huge demand for its products.
And that demand isn't likely to slow down anytime soon. Nvidia believes that global data center capital expenditures will rise to $3 trillion to $4 trillion by 2030. That's up from $600 billion in 2025 and would be a huge opportunity for the company and its competitors.
NASDAQ: NVDA
Key Data Points
AMD offers similar products, but its related ecosystem is seen as a downgrade. As a result, its data center business is about a tenth the size of Nvidia's. However, it thinks it can capitalize on some emerging opportunities.
Because Nvidia is sold out of cloud GPUs, clients may turn to AMD to purchase computing power. This could make them realize that AMD's technology has gotten close to Nvidia's, potentially driving its growth. Its management is counting on this and has projected that its data center division will deliver a 60% compound annual growth rate (CAGR) through 2030.
If AMD can deliver that level of growth, it's a no-brainer buy at today's levels.
Broadcom is taking a completely different approach to AI. While GPUs are great for a wide variety of computing applications, some of their capabilities are wasted when they're deployed for only one purpose. This opens the opportunity for its application-specific integrated circuits (ASICs).
When a workload is configured in a standardized manner, ASICs can deliver performance superior to that of general-purpose computing units like GPUs at a lower price. Broadcom is partnering directly with various AI hyperscalers to design ASICs for their AI models, and this is leading to monster growth.
NASDAQ: AVGO
Key Data Points
For the first quarter, Broadcom expects its AI semiconductor revenue to double year over year. That's just the beginning, as these chips could become even more popular than Nvidia's GPUs over the next few years.
All three of these are great AI investments, but none of them actually manufactures any chips.
Taiwan Semiconductor supports all three companies
Nvidia, AMD, and Broadcom are fabless designers, which means they design the chips but don't make them. Several companies in the supply chain handle this work for them, including Taiwan Semiconductor (TSMC).
NYSE: TSM
Key Data Points
TSMC operates the world's largest chip foundry business and makes plenty of money doing so. Without its capabilities, AI technology wouldn't look the same. Management believes its AI chip business will have a mid- to high-50 % CAGR between 2024 and 2029, underscoring the strong demand. That level of growth is unheard of in the chip industry, and it bodes well for the stock.
I think Taiwan Semiconductor is an excellent pick alongside the other three, and all four of them should go higher throughout the year.
