Spending on AI is projected to keep rising through 2026.
If you took my advice on a few chip stocks for 2025, you’re likely feeling pretty pleased. I suggested investing in Nvidia, Taiwan Semiconductor Manufacturing, and ASML Holding. As we approach 2025, sticking with these investments might yield significant rewards.
The so-called “worst” performer was Nvidia, which still saw a 39% increase. Taiwan Semiconductor and ASML each experienced a 54% rise, making them notable success stories. Regardless of whether you followed my tips, it’s crucial for all investors to consider whether to hold onto or further invest in these stocks as we move into 2026. Personally, I think there are a couple of stocks I’d love to own, both still holding potential to outperform the market.
Different roles in the chip supply chain
Each of these three companies has its own unique position within the chip industry. Nvidia specializes in designing chips for graphics processing units (GPUs), which have really become the go-to choice for generative AI workloads—demand for GPUs is off the charts. However, it’s worth noting that Nvidia only designs these chips; they don’t handle the manufacturing themselves.
That’s where Taiwan Semiconductor comes into the picture. They run the factories that not only manufacture chips based on customers’ designs but also remain neutral—meaning they don’t compete with Nvidia. This arrangement works well, given the staggering investment and expertise needed to produce cutting-edge chips. Companies like Nvidia often avoid manufacturing due to the monumental costs and specialized equipment involved, much of which is provided by ASML.
ASML produces cutting-edge lithography machines that are essential for placing tiny electrical patterns on chips. Unique in their field, ASML’s technology all but ensures growth as long as chip demand remains high.
So, the question is: which of these companies should you consider investing in for 2026?
ASML has become pricier as it has grown.
Looking ahead, analysts on Wall Street anticipate Nvidia to grow by 51%, Taiwan Semiconductor by 31%, and ASML by 15%. It’s clear expectations have shifted for these companies. However, they’re currently valued quite differently.
ASML trades at a forward P/E ratio of 34, while Nvidia’s and Taiwan Semiconductor’s ratios are 25 and 21, respectively. I think investing in Taiwan Semiconductor and Nvidia may be the smarter choice, as ASML has become a bit too pricey given its slower growth trajectory. While ASML could still perform well, I feel more confident about the other two as we approach 2026.
