The U.S. stock market has been quite volatile in 2026. Heightened geopolitical tensions and rapid artificial intelligence (AI) adoption are disrupting industries and business models. These forces are creating both massive opportunities and significant risks.
In this environment, doubling down on resilient sector leaders can make sense. Here's why Nvidia (NVDA 1.53%) and Taiwan Semiconductor Manufacturing (TSM 4.96%) fit the bill.
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1. Nvidia
Nvidia reported $68.1 billion in fourth-quarter fiscal 2025 (ended Jan. 25, 2026) revenue, up 73% year over year. Data center revenue was $62.3 billion, up 75% year over year and 22% sequentially. Management is guiding for first-quarter fiscal 2027 revenue of $78 billion, plus or minus 2%, excluding contributions from China.
The robust growth trajectory is all set to continue in the coming years. Management highlighted that demand for its AI chips is driven not only by AI training workloads, but also by cloud providers, enterprises, and sovereign customers running AI models in a production environment (inference workloads). AI systems, particularly agentic AI applications, are actively generating revenue for customers. Customers are increasingly investing in compute capacity, because it directly translates into revenue. This dynamic is supporting sustained adoption of Nvidia's latest Blackwell platforms.
NASDAQ: NVDA
Key Data Points
Nvidia is also focused on expanding its presence in networking and offering rack-scale AI systems. Networking revenue reached $11 billion in the fourth quarter and over $31 billion in fiscal 2026, highlighting the strong adoption of its networking interconnect technologies such as NVLink, InfiniBand, and Spectrum-X. Additionally, by delivering rack-scale solutions rather than stand-alone chips, the company is deepening customer reliance on its technology and creating a sticky client base.
Finally, Nvidia generated $97 billion in free cash flow in fiscal 2026, giving the company flexibility to invest aggressively in next-generation systems. Taken together, these tailwinds position Nvidia stock as a smart pick now.
2. Taiwan Semiconductor Manufacturing
Being the global foundry leader with over 70% market share, Taiwan Semiconductor Manufacturing (or TSMC) is benefiting dramatically from the explosive AI and high-performance computing (HPC)-driven demand for cutting-edge logic and memory chips.
In the fourth quarter, TSMC's revenue was up 25.6% year over year to $33.1 billion, while operating margin reached 54%. HPC accounted for 58% of the total fiscal 2025 revenue. Advanced process technologies (7-nanometer and below) made up 74% of the wafer revenue in fiscal 2025, while 3-nanometer alone contributed 24% of the 2025 wafer revenue.
This mix highlights a shift of the company's revenue mix toward higher-margin businesses tied to long product cycles in AI and HPC. The dynamic could lead to improved earnings quality and multi-year growth visibility.
NYSE: TSM
Key Data Points
Management is guiding for revenue of $34.6 billion to $35.8 billion in the first quarter, implying 38% year-over-year growth at the midpoint. That projection seems attainable, considering that the company's 2-nanometer process node technology has already entered high-volume manufacturing in the fourth quarter of 2025. The company has planned for a rapid ramp of these chips in 2026. Management expects this ramp to be bigger than that of the 3-nanometer chip from the start.
AI visibility is also expanding. TSMC expects AI accelerator revenues to grow at a compound annual growth rate (CAGR) of mid-to-high 50% from 2024 to 2029. Management also expects total revenue to grow at a 25% CAGR in this time frame. With technology leadership and exceptional long-term revenue visibility, TSMC appears to be an attractive buy now.
