It's been a little over three years since artificial intelligence (AI) became the hottest topic on Wall Street. Nothing lasts forever, but it's hard to envision the AI boom ending this year. At least, not while billions of dollars continue to flow into data centers, chips, and other AI infrastructure.
So, how is the AI space shaping up for 2026? Consensus estimates from Goldman Sachs indicate that AI companies could spend more than $500 billion on capital expenditures this year. That would be an increase of more than $100 billion from 2025.
In other words, the AI train is chugging along faster than ever. Which stocks will benefit the most from all this AI spending? Recent developments point to some familiar faces.
Here is why I predict that Nvidia (NVDA +1.60%) and Taiwan Semiconductor Manufacturing (TSM +2.29%) will be this year's big AI winners.
Image source: Nvidia.
The top AI GPU company is launching a new chip
Nvidia has grown by leaps and bounds over the past several years. Its GPU chips are the hardware of choice for AI hyperscalers, utilizing Nvidia's CUDA programming to build massive data centers where thousands of GPU chips work together as clusters to train and operate AI models.
The company's Hopper GPU architecture helped it capture the AI data center market early on. Since then, Nvidia's customers have mostly stuck with its GPUs, which have a reported market share of 85% to 90%. It's why Nvidia's revenue surged by 1,000% over the past five years, and the stock has performed similarly.
NASDAQ: NVDA
Key Data Points
So, why is Nvidia still a big winner this year? AI companies have already laid extensive groundwork, building primarily on Nvidia's hardware. It's hard to see that changing dramatically while the investment boom still has this much momentum. Nvidia's next-generation architecture, Rubin, recently entered full production, and the company has a $500 billion backlog extending through 2026.
That should set the stage for continued growth at Nvidia. The stock's current price-to-earnings ratio of 45 still offers excellent value, especially given analyst estimates for 36% annualized earnings growth over the long term. Unless the AI boom falls off overnight, Nvidia is likely to continue its winning ways this year.
The leading foundry continues to capture AI growth
Investors can follow the AI chip breadcrumbs to this next winner. Nvidia and most other chip companies don't actually manufacture anything. Instead, they outsource production to foundries. Taiwan Semiconductor Manufacturing, also known as TSMC, is the world's leading foundry, with an estimated market share of 72%. Its next-closest competitor controls just 7% of the market.
TSMC's dominance stems from some serious competitive advantages. It has advanced manufacturing techniques and higher factory capacity, making it difficult for other foundries to compete with TSMC, especially in high-end chips used in AI data centers. TSMC's market share has gradually increased over the past few years as the AI chip market has exploded.
NYSE: TSM
Key Data Points
The company recently posted a stellar earnings report and is increasing capital expenditures to $52 billion-$56 billion in 2026, up from $41 billion in 2025. It's a strong signal that TSMC sees more growth on the horizon, as global AI chip demand primarily funnels through its factories. Analysts now see the company growing earnings by nearly 30% annually over the next three to five years.
TSMC was a red-hot stock last year, surging more than 53%. However, it seems that investors still aren't appreciating TSMC's growth enough. The stock currently trades at a price-to-earnings ratio of 30, which, frankly, is a compelling valuation for a dominant business with such bright growth prospects. If investors continue to appreciate TSMC's strong performance, the stock seems likely to continue running strongly throughout 2026.
