Pinpointing the best-performing AI stock for 2026 is no easy feat. It's impossible to know which companies will launch innovative features or if 2026 will be a year of buildout. We only have a bit of information about what to expect in 2026, and using that tidbit to our advantage is the best that we can do.
What piece of information do we have that clues us into 2026's future? Spending projections from the AI hyperscalers. In 2025, this cohort set a new record for how much they spent on data center capital expenditures. However, every company has informed investors that 2026 will be a year of further growth on 2025's levels. This should immediately cause investors to think of the computing unit providers, like Nvidia (NVDA +0.99%), AMD (AMD +0.88%), or Broadcom (AVGO +0.43%). However, determining which one of these companies will be the best performer in 2026 is nearly impossible. Any one of them could announce a new product or partnership that turns the AI investing world on its head. Still, there's one company that will benefit regardless of which company is in vogue in the computing world: Taiwan Semiconductor (TSM 0.28%).
Taiwan Semiconductor is a neutral party in the AI arms race, as its only focus is to provide the best-performing chips possible to its clients, which include the three listed above. Taiwan Semiconductor is in a great position to thrive in 2026, and I think it could be the best performer.
Image source: Getty Images.
Taiwan Semiconductor is primed to thrive over the next few years
All three of the companies listed above are known as fabless chip companies, which means they design the chips, but they don't manufacture them in-house. Instead, they farm that work to various companies, including Taiwan Semiconductor on the chip side.
Taiwan Semiconductor has thrived on this relationship, as it allows them to sell to competitors with no repercussions. As long as there is heightened demand for chips, Taiwan Semiconductor will continue to do well. 2026 will provide a higher demand for chips than any year prior, so this trend is alive and well. Still, 2026 isn't expected to be the end, either. Nvidia projects that global data center capital expenditures will rise from $600 billion in 2025 to $3 trillion to $4 trillion by 2030. That's a bold projection that some may find to be unbelievable. But you must remember that the leadership in these companies has more information than individual investors.
NYSE: TSM
Key Data Points
During its Q3 earnings release, Nvidia noted that it is "sold out" of cloud graphics processing units (GPUs). As a result, companies are having to place their orders years in advance for computing units that haven't been released yet. This provides Nvidia's management team visibility to multiple years' worth of growth, making their projections somewhat trustworthy. While the exact dollar figure may not pan out, the direction is likely right.
Taiwan Semiconductor is in a key position to provide chips for this massive market, placing it in an excellent spot to thrive. Even if Nvidia's dominance slips and a different company like AMD or Broadcom steals market share, TSMC will still maintain its role as a chip provider, allowing it to benefit regardless of which company is leading the computing unit industry.
However, one issue could derail the whole buildout.
Taiwan Semiconductor is launching a new technology
It's no secret that data centers consume a ton of energy. This is placing a serious strain on the power grid and could become the limiting factor in the AI buildout. Taiwan Semiconductor recognizes this and has developed its next chip generation to address this problem. Its 2nm chips that are entering production right now that consume 25% to 30% less power than their previous counterparts when configured to run at the same speed.
This is a huge improvement, and Taiwan Semiconductor's substrate chip generations are targeting further power consumption improvement after that. This technology isn't going to come for free, and it will allow Taiwan Smeicodncutor to grow its revenue at a rapid pace over the next few years, which bodes well for the stock.
I'm not sure which computing unit provider will be best in 2026, but I know that Twains Semiconductor is positioned to thrive regardless. This places Taiwan Semiconductor on my short list for stocks that could be the best performer in 2026, and I think it's a genius stock to buy now to capture the upside of the AI buildout without the risk of needing a single company to maintain its dominance.
