Two Top AI Stocks to Buy for 2026

Key Takeaways Alphabet may begin selling its in-house chips TSMC is a core supplier of GPUs

As the new year approaches, it's time to identify stocks with strong buying potential. Two stocks poised to deliver substantial returns in 2026 are Alphabet (NASDAQ: GOOG, GOOGL) and Taiwan Semiconductor Manufacturing (NYSE: TSM). Both stocks performed exceptionally well in 2025 and are well-positioned for continued growth in 2026.

1. Alphabet Few stocks matched Alphabet’s performance in the second half of 2025. Since July 1, its shares have surged over 80%, driven by favorable legal outcomes, AI breakthroughs, and the potential launch of a new business division.

Once criticized for lagging in generative AI, Alphabet has now turned the tables. OpenAI, the developer of ChatGPT, recently issued a "red alert" over Alphabet’s rapid advancements in AI technology. This isn’t surprising, given Alphabet’s superior resources and lower computing costs compared to OpenAI.

Alphabet’s cost advantage stems from its Tensor Processing Units (TPUs). While NVIDIA’s GPUs handle diverse workloads, TPUs excel at specific tasks and offer better performance at a lower cost when dedicated to single workloads. By co-developing TPUs with Broadcom, Alphabet avoids paying NVIDIA’s premium GPU prices, enabling it to build a larger, more cost-efficient computing infrastructure.

Previously, businesses could only access TPUs through Google Cloud, but this may change. Reports suggest Meta Platforms is negotiating to purchase TPUs directly from Alphabet—a strategic shift that could open a new revenue stream and drive explosive growth if more companies follow suit.

While success isn’t guaranteed, the signs point to Alphabet being a top investment for 2026.

2. Taiwan Semiconductor Manufacturing (TSMC) Whether Alphabet or NVIDIA dominates AI computing, both rely on a steady supply of chips. Most leading AI companies are fabless, outsourcing manufacturing to TSMC, the industry’s largest foundry.

2025 was a banner year for TSMC, with staggering growth each quarter. As long as AI investment remains high, demand for TSMC’s chips will stay strong. Record capital expenditures by AI hyperscalers in 2025 are expected to rise further in 2026, reinforcing TSMC’s bullish outlook.

This growth trajectory could last years. NVIDIA predicts global data center spending will hit $3–4 trillion by 2030. If achieved, the surge in chip demand would significantly boost TSMC’s business, making it a top pick for 2026 and beyond.

Should You Buy Alphabet Now? Before investing in Alphabet, consider this: The "Stock Advisor" team at The Motley Fool recently identified their top 10 stock picks—Alphabet didn’t make the list. These 10 stocks are projected to deliver massive returns.

For context: A $1,000 investment in Netflix (recommended on December 17, 2004) would now be worth $499,978. Similarly, NVIDIA (recommended on April 15, 2005) would have turned $1,000 into $1,126,609.

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