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Big tech continues to commit significant resources to developing AI infrastructure in 2026.
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While AI chip manufacturers have led recent stock market gains, the forthcoming growth might be seen in a different set of stocks.
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Investing in companies that deal with bottlenecks in AI development could be worthwhile.
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10 stocks we like better than Axcelis Technologies ›
Selecting individual stocks might provide investors a way to outperform the market. There are plenty of promising candidates out there, particularly in AI, which has recently generated impressive returns. For instance, the VanEck Semiconductor ETF has more than tripled over the last five years, mainly due to its focus on AI chip manufacturers.
While AI-focused ETFs can do quite well, picking the right individual AI stocks might yield even higher returns. Take Nvidia, for instance; it’s seen an increase of over 1,300% in the past five years.
To replicate those results, investors might want to consider smaller firms. Doubling revenue and profits doesn’t always require massive dollar growth, and I believe several smaller stocks have notable potential.
Axcelis Technologies (NASDAQ:ACLS) specializes in ion implantation systems essential for semiconductor production. This technology is applicable to both AI chips and chips used in sectors like electric vehicles.
The company saw its stock thrive between 2021 and 2023 as EV demand surged, but it faced challenges when that demand dipped.
Recently, both sales and net income have been down year-over-year, yet management pointed out in its Q3 report that the rising demand for AI chips should benefit the company moving forward. If they increase their market share in the AI chip sector, Axcelis could see growth again.
Axcelis is also in the process of merging with Veeco Instruments, which will broaden its market reach and fortify its status as a semiconductor manufacturer. This deal is set to complete in the latter half of 2026.
Currently, Axcelis is trading at a modest $22, likely due to weak investor sentiment reflected in its P/E ratio. Should it regain the high growth rates from earlier years, it might look like a bargain at that valuation.
Airen and crypto mining are significant players focused on developing AI infrastructure, but there are also lesser-known firms like Bitfarms (NASDAQ:BITF). Despite being somewhat under the radar, it’s had impressive growth.
Bitfarms is developing AI data centers to provide technology companies with essential energy and infrastructure. The recent sale of its operations in Paraguay should allow the firm to redirect capital and resources towards expanding in North America, where it has a substantial 2.1 GW project pipeline.
These projects won’t yield immediate financial returns, but they could help secure lucrative contracts over several years. Bitfarms still has a market cap of less than $2 billion, while IREN and Cipher Mining boast market caps of $13 billion and $7 billion, respectively.
Although two major AI infrastructure companies have already established contracts with significant tech firms, as Bitfarms’ pipeline gains traction, the gap in market caps compared to its competitors is likely to narrow.
This situation is somewhat reminiscent of the time before smartphones, when digital photographers were limited by memory capacities. Once the memory was full, no more pictures could be taken until a new card was inserted. While today, few use standalone cameras, this analogy can also apply to AI chips.
AI tasks necessitate quick access to vast data. Each AI chip depends heavily on high-bandwidth memory. Without adequate memory nearby, AI chips can struggle with complex workloads, like those seen in tools such as ChatGPT.
Western Digital (NASDAQ:WDC) is a prominent provider in memory solutions for AI setups. The supply of these chips is a key challenge in establishing AI infrastructure, which is partly why Western Digital enjoyed a 27% year-over-year revenue increase in the first quarter of fiscal 2026. CFO Chris Senesael mentioned that demand from data centers will primarily drive revenue growth starting in Q2.
With Western Digital’s stock having quadrupled in the past year, investors are clearly recognizing the significant potential ahead.
Before considering an investment in Axcelis Technologies, keep the following in mind:
Our analysts at Motley Fool Stock Advisor have pinpointed what they regard as the Best 10 stocks to consider right now, and Axcelis Technologies isn’t featured among them. These selections show promise for substantial returns in the future.
It’s worth reflecting on past recommendations, like Netflix from December 17, 2004—investing $1,000 then would now be worth $488,222!* Or with Nvidia, recommended on April 15, 2005, your $1,000 investment would have ballooned to $1,134,333!*
Notably, the average return from Stock Advisor is at 969%—far surpassing the S&P 500’s 196%, proving a clear advantage. Don’t miss our latest Top 10 list. stock advisorjoin an investing community built by retail investors, for retail investors.
*Stock Advisor will return on January 9, 2026.
Mark Guberti holds positions at Cipher Mining and Iren. The Motley Fool has a position in and recommends Nvidia. The Motley Fool has Disclosure policy.
Ignoring the noise: 3 AI stocks set to soar 200% by end of 2010 Originally published by The Motley Fool
