Quick Look
- Semiconductor stocks are on track to advance in 2026 as a global supercycle gains momentum.
- NVIDIA is central to the story, but it is broadening, with leadership changes possible by mid-year.
- Industrial chip-makers are well-positioned for long-term strength, supported by AI and end-market demand.
As central as NVIDIA (NASDAQ: NVDA) is to the AI-driven semiconductor supercycle, it is not the only semiconductor stock set to benefit. While AI, GPUs, and data center capabilities are at the core of the movement, they are impacting various sectors across the economy and are complemented by steady industrial demands. The industrial chip market has been under pressure for years due to supply imbalances stemming from the COVID-19 pandemic and subsequent post-pandemic supply-chain disruptions. The story at the end of 2025 is that demand is improving and growing in critical markets, including telecom and automotive, with AI underpinning the long-term outlook. Advancing and evolving AI means the evolution of all things technological, a cycle that will play out over years, if not decades.
A look at the Philadelphia Semiconductor Index (NASDAQ: SOXX) reveals a market in rally mode, poised to set new highs by the end of 2025. While the action is underpinned by NVIDIA’s consensus analysts' forecast for a 45% upside as of early December, it is not the only stock driving the action.
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Broadcom and Advanced Micro Devices Are the Top 2 Semiconductor Stocks to Own in 2026
In fact, unlike the S&P 500 index, NVIDIA is only the third-largest holding, with Broadcom (NASDAQ: AVGO) and Advanced Micro Devices (NASDAQ: AMD) making up larger portions of the fund.
This reflects the broader strength across the semiconductor sector, where AI-driven demand is fueling growth for multiple companies—not just NVIDIA.
Both AVGO and AMD are well-positioned in the race to dominate GPU technologies, which are central to AI, data center expansion, and advanced computing workloads.
Broadcom’s leadership in networking and custom silicon, paired with AMD’s progress in GPU and CPU architecture, supports analyst expectations for significant market share gains and revenue acceleration by 2026. While NVIDIA continues to draw headlines—including for its $2 billion investment in chip design innovation—these two companies also play foundational roles in building the infrastructure behind AI.
Although AVGO and AMD currently lead the fund’s allocations, other semiconductor stocks are strategically aligned with the same long-term demand drivers.
Several are well-positioned to benefit from continued AI adoption, industrial recovery, and expanding chip applications across telecom and automotive markets.
Top-Three Micron Technology’s Outlook Swells on Product Demand and Pricing
Micron Technology (NASDAQ: MU) is critical to the AI industry because of its position in the HBM market. HBM, specifically HBM3 and the subsequent HBM4 architecture, is vital for AI and datacenter operations and in high demand. Each GPU, whether sold by NVIDIA, Broadcom, or Advanced Micro Devices, uses multiple stacks of HBM chipsets, making the market highly in demand.
The takeaway in December is that demand is driving shortages that affect adjacent HMB markets, including automotive, telecom, and gaming/graphics, and prices are rising. The impact on Micron is accelerating growth and explosive margins, as evidenced by the fiscal Q4 release. Revenue growth accelerated sequentially by nearly 1,000 basis points to 46%, before the latest round of price increases took effect and is expected to remain strong. Analysts have been lifting their forecasts for calendar 2026 and now expect a 50% revenue growth and 100% earnings growth. Analysts have also been raising their stock price targets, pointing to another 50% upside for this market.
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Fourth-Place Marvell Technology to Experience Material Strength for 2 Years
Marvell Technology (NASDAQ: MRVL) affirmed its place in the AI ecosystem with its Q3 fiscal year 2026 earnings report. The report was better than expected and was compounded by robust guidance, spurring an equally strong response from the analysts. Not only were results underpinned by a solid 38% increase in the Datacenter-specific business, but its Networking and Communications businesses grew by much stronger amounts. The critical detail is the guidance, which expects robust growth to continue in the current quarter, and the cash flow it produces.
Marvell puts its cash to good use, maintaining a fortress balance sheet, investing in growth, and returning capital to investors. Capital returns are substantial, but the token dividend is reliable, and share buybacks reduce the count quarterly. The Q3 activity reduced the share count by approximately 0.75% and is expected to continue in the upcoming quarters. Analysts are lifting their stock price targets following the release and point to a 30% to 40% upside at the high end.
Fifth-Place Analog Devices Growth Is Accelerating
Analog Devices (NASDAQ: ADI) was among the first industrial semiconductor manufacturers to indicate the industry's bottom. That occurred earlier in calendar 2025 and has accelerated since.
Revenue growth accelerated sequentially, and year-over-year (YOY) in fiscal Q4 2025, and the guidance for 2026 is strong. The company forecasts YOY growth to accelerate again in Q1 and may be cautious in its estimates.
Other pertinent details include significant margin expansion, expectations for additional improvement, and cash flow, which supports dividends and share buybacks. Analog Devices' capital return is more substantial than Marvell's, although the upside potential, as indicated by analyst trends, is less. The dividend yields about 1.4% as of early December, and buyback activity reduced the count by more than 1% for the quarter.
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