According to FactSet Research, artificial intelligence (AI) developers are set to spend $500 billion on infrastructure this year. Hyperscalers like Microsoft, Alphabet, Amazon, Meta Platforms, and OpenAI aren't slowing their AI buildouts. This means investors should be prepared to see continued acceleration in data center construction and chip procurement throughout 2026.
Below, I'll break down my top two AI semiconductor stocks for 2026 set to benefit from the infrastructure tailwinds. Spoiler alert: Nvidia didn't make the cut.
Image source: Getty Images.
1. Broadcom
When it comes to data centers, Broadcom (AVGO 0.65%) is a name that often gets overshadowed by the pure-play chip designers like Nvidia or Advanced Micro Devices. Smart investors understand that discounting Broadcom's role in the AI infrastructure value chain is a big mistake, though.
NASDAQ: AVGO
Key Data Points
Think of Broadcom as the digital plumbing that keeps AI data centers up and running. While everyone else talks about GPUs, Broadcom supplies the networking gear, switches, and interconnects that keep AI workloads flowing across chip clusters.
In addition, many of the hyperscalers are exploring the idea of complementing their GPU stacks with custom architectures of their own. Broadcom helps design these custom silicon solutions with a number of high-profile developers, including Alphabet, Apple, ByteDance, and Meta.
AVGO PE Ratio (Forward) data by YCharts
Considering nearly 100% of analysts covering the stock rate it a buy, in combination with a steeply discounted valuation based on forward earnings estimates, Broadcom looks like a no-brainer opportunity to buy and hold for the ongoing AI infrastructure boom.
2. Taiwan Semiconductor Manufacturing
Taiwan Semiconductor Manufacturing (TSM 0.86%) is the ultimate pick-and-shovel stock for the AI revolution. TSMC doesn't sell chips used to build generative AI applications. Instead, the company serves a much more critical role.
Nvidia, AMD, Broadcom, Micron Technology, and many more outsource their manufacturing needs to TSMC's foundry. TSMC is the largest chip manufacturer in the world in terms of revenue -- holding an estimated 70% market share.
NYSE: TSM
Key Data Points
Over the last few years, TSMC has gone through somewhat of a renaissance. The company is no longer vulnerable to the cyclical trends that once plagued the semiconductor industry. Thanks to AI, TSMC's services are constantly in demand as hyperscalers increase their capital expenditure (capex) budgets and buy more chips.
TSM Revenue (TTM) data by YCharts
The company's revenue and profitability profile are accelerating faster than Wall Street anticipated. Perhaps even better, TSMC's management guided for further growth over the coming years as the infrastructure movement continues to unfold.
With new applications entering the market, AI workloads will continue to expand. Given these dynamics, big tech will need to ensure it has enough capacity and memory capabilities in place -- fueling further demand for both general-purpose and custom chips.
To me, TSMC might be the most underrated AI chip stock of the decade. Now looks like a great time to load up on the stock before its next growth arc comes into full bloom.
