Best semiconductor stocks to watch in 2026

What are semiconductor stocks?

Semiconductor stocks are shares in companies involved in the design, manufacturing and distribution of semiconductors, the microchips that power everything from smartphones and data centres to cars and medical devices. 

The sector spans several distinct business models: chip designers (Nvidia, AMD, Qualcomm), foundries that manufacture chips for others (TSMC, Samsung), equipment makers whose machines are essential to chip production (ASML, Applied Materials) and integrated device manufacturers that both design and make their own chips (Intel). 

Our share dealing account gives access to all major semiconductor stocks, whether listed in the US, Taiwan or Europe.

The semiconductor industry is highly cyclical, with periods of chip shortages alternating with inventory gluts. What distinguishes the current cycle is the AI-driven structural demand shift: data centre operators are spending at unprecedented rates on the specialised chips needed for training and running large AI models, creating a demand floor that has moderated the historical peaks-and-troughs pattern, at least for AI-optimised chip categories.

Best semiconductor stocks to watch in 2026

Nvidia (NASDAQ: NVDA)

Nvidia holds approximately 80% of the AI accelerator market and its H100 and B200 Blackwell chips have become the de facto standard for AI model training at scale. Its market capitalisation of approximately $5.3 trillion as of mid-August 2026 makes it the world's most valuable company. Q2 fiscal 2027 results are due 27 August 2026, with analysts expecting continued double-digit data centre revenue growth. Nvidia's 74.1% gross margin reflects the extraordinary pricing power it holds in a market where customers have few alternatives.

Taiwan Semiconductor Manufacturing Company (NYSE: TSM)

TSMC is the world's largest contract chip manufacturer, producing advanced semiconductors for Nvidia, Apple, AMD, Qualcomm and others. Its Q2 2026 results showed revenue of $40.2 billion, a gross margin of 67.7% and an operating margin of 60.3%, per its investor relations page. Management guided Q3 revenue to $44.6-45.8 billion. TSMC's 2-nanometer process technology entered high-volume manufacturing in late 2025, with its enhanced N2P and A16 processes expected in the second half of 2026. The principal risk is geopolitical: TSMC's concentration of advanced manufacturing in Taiwan creates significant strategic vulnerability.

ASML Holding (NASDAQ: ASML / AMS: ASML)

ASML holds a global monopoly on extreme ultraviolet (EUV) lithography machines, the equipment that chip manufacturers need to produce the most advanced nodes. Without ASML's EUV machines, TSMC, Samsung and Intel cannot manufacture leading-edge chips. This monopoly position gives ASML extraordinary pricing power and near-certain revenue visibility. The primary risk is export controls: the US has restricted ASML from selling its most advanced machines to China, reducing the addressable market.

ARM Holdings (NASDAQ: ARM)

ARM designs the intellectual property that underlies most mobile processors and a growing proportion of data centre chips. Rather than manufacturing chips itself, ARM licenses its instruction set architecture and processor designs to companies including Apple, Qualcomm, Amazon and Nvidia. The AI expansion has accelerated ARM's growth, since data centre operators increasingly favour ARM-based chips for their energy efficiency. ARM's royalty-based model gives it exposure to every ARM-based chip sold globally.

Broadcom (NASDAQ: AVGO)

Broadcom is both a semiconductor and infrastructure software company, producing chips for networking, broadband, data centres and AI applications. Its custom AI chip (ASIC) business has emerged as a meaningful competitor to Nvidia's GPUs for large-scale AI deployments, with hyperscalers including Google and Meta commissioning bespoke Broadcom chips for their specific AI workloads. Broadcom's diversification across chips and software provides more earnings stability than pure-play chip designers.

UK-listed semiconductor stocks

UK investors seeking domestically listed semiconductor exposure have fewer options. IQE (AIM: IQE) is a compound semiconductor wafer supplier serving the 5G, photonics and sensing markets. Its AI-related tailwind is indirect: AI infrastructure investment is driving demand for the photonics components that its wafers enable. CML Microsystems (AIM: CML) focuses on mixed-signal and microwave semiconductors for communications markets. Both are small-cap AIM stocks with significantly higher risk profiles than their US counterparts.

How to invest in semiconductor stocks

Risks of investing in semiconductor stocks

• Cyclicality: demand for chips can collapse quickly as customers work through inventory buildups. AI-driven demand has moderated but not eliminated this cycle.
• Geopolitical risk: semiconductor supply chains are geopolitically contested. US export controls targeting China, Taiwan's strategic position and the US-China tech war all create significant event risk.
• Concentration risk: the AI chip boom has concentrated returns in a small number of companies. A disappointment from Nvidia or a slowdown in hyperscaler AI spending could weigh on the entire sector.
• Valuation risk: leading semiconductor stocks trade at elevated multiples. Any indication of demand slowdown or margin compression could trigger sharp de-rating.

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