7 Best Semiconductor Stocks for 2026

Volatility has been the name of the game for semiconductor stocks in late summer 2026, with loyal industry investors hanging on for the ride.

Even so, chip investors will take August’s choppy performance over July’s brutal losses, when the keystone PHLX Semiconductor Index (SOX) fell 21%, its worst month since October 2008. Since then, the SOX has rallied 21.3% from its July 29 low, technically pulling back out of bear market territory.

Meanwhile, the iShares Semiconductor ETF (ticker: SOXX) similarly fell 21% in July but remains up roughly 86% year to date through Aug. 17, illustrating how enormous the preceding AI-driven rally was before the July jitters.

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With the semiconductor industry posting its best quarter on record in Q2, up more than 80%, experts say they’re cautious about chasing the latest movers. However, AI has changed how work gets done, and the infrastructure spending behind it keeps climbing. The major cloud providers have guided to roughly $700 billion in combined 2026 capital spending, up from about $410 billion last year.

Risks for Semiconductor Stocks

Still, there are some big issues to weigh for semiconductor stocks for the rest of the year. First, AI spending sustainability equates to a blinking yellow light for traders. By many industry estimates, AI capital spending has been growing faster than AI revenue, and markets have, at times, repriced that gap this year.

Second, the industry’s biggest customers are becoming competitors, which changes the equation for investors, especially newer entrants. One industry forecast projects hyperscalers’ custom in-house chips taking more than a quarter of the AI chip market in 2026, up from about a fifth in 2025.

Bull Case for Semiconductor Stocks

On the upside, chip stocks continue to defy the naysayers with significant growth outlooks. “Look at Micron in June, and SanDisk just confirming a long-term demand story for memory chips,” says David Russell, global head of market strategy at TradeStation Group. “AI is turning a low-multiple boom-and-bust product line into a higher-quality durable business.”

The semiconductor market is also adjusting to a much larger-demand environment. “Forecasts built around PCs and mobile devices are like cooking for three when 10 people are coming to dinner,” Russell notes. “AI data centers have dramatically expanded the appetite for chips.”

Should You Invest in Semiconductor Stocks Now?

Russell says investors should remain optimistic about semiconductors in the coming months because of the positive news flow and because the industry keeps surprising with strong results. “Traders who sold in July might be kicking themselves and looking for opportunities to reenter,” he says.

In a semiconductor market marked by turmoil only a month ago, but riding higher in August, which stocks make the most sense to buy now? These seven chip names should fit the bill nicely:

*Based on share price as of Aug. 17 market close, and TipRanks’ analyst consensus price target tables.

KLA Corp. (KLAC)

After a rough early summer, Milpitas, California-based KLA Corp.’s stock is roaring back. KLAC shares are up 69% year to date, fueled by an 18% run-up over the past three months. The company, which specializes in inspection equipment for the micro-chip sector, had a downbeat July, as KLAC shares fell 40% before rising again through mid-August. Market analysts cite profit-taking from giddy KLAC shareholders in July, noting that fourth-quarter earnings breezed beyond analyst estimates, led by the company’s burgeoning foundry and logic division, which posted revenues 7% higher than in the previous quarter.

Meanwhile, service revenues rose 17% in the quarter compared to 2025, and KLAC says its revenues in the second half of 2026 should rise by 20% compared with the first half. Robust demand in its advanced packaging channel buoyed that performance, while its specialty process and component-inspection businesses should see 25% revenue growth in the second half of 2026.

In mid-August, 12 Wall Street analysts tracked by TipRanks called for a $241.80 consensus 12-month price target, which translates to a 17.5% share price hike.

Micron Technology Inc. (MU)

Micron remains a thunderbolt in 2026, with its shares returning 255% year to date and a staggering 737% over the past year. The company got a fresh boost on Aug. 17, as Commerce Secretary Howard Lutnick confirmed earlier reports that the U.S. government would frown upon U.S. companies using Chinese memory-chip supplies. Lutnick said “it’s not great American companies using Chinese memory” in an interview with the Wall Street Journal, which covered China’s push for foreign sales of its memory-chip supplies.

Micron is expected to be a big beneficiary of any push from Uncle Sam to keep Chinese chip components out of the U.S. anytime soon, as tech companies continue to open their checkbooks to companies that build memory components for the AI hardware market.

Major chip developers say they like where MU is positioned right now, and for good reason. “We expect Micron earnings per share to increase close to eight times in value in fiscal year 2026 and a further two times more in FY 27,” says Rolf Bulk, head of semiconductors and infrastructure at Futurum Equities. “Despite the rally, the stock remains attractively priced in that context.”

Other market experts say Micron is highly indicative of semiconductor stocks, as it illustrates the enormous range of possible outcomes, good and bad. “If MU’s present earnings trajectory continues for the next three to five years, the stock could ultimately reach approximately $3,000,” says Nigam Arora, founder at The Arora Report, a global investment research firm. “If Micron’s earnings begin sputtering in 2027 or 2028, however, the stock could instead fall toward $300 to $400.”

The key question is whether today’s extraordinary AI-driven earnings growth is secular or simply part of another memory cycle. “Over the next few quarters, the market will continually reprice the probability of those two very different outcomes,” Arora says.

Nvidia Corp. (NVDA)

Like most chip stocks, Nvidia had a healthy one-month return for its shareholders, and its year-to-date performance stands at 21%, up 6% since late June.

The tech giant is opening eyes across Wall Street with a transactional $105 billion commitment to back a new OpenAI data center at the PORTS-Pike Technology Campus in Pike County, Ohio. Nvidia will also plow $1.5 billion more in financed cash into SoftBank unit SB Energy, tasked with developing the data center. On the other side of the deal, OpenAI is promising to deploy only Nvidia chips once the site is up and running, with an expected launch date in 2028.

“AI is becoming infrastructure — the foundation for intelligence in every industry — and land, power and shell have become vital in the age of AI. Now is the time to scale the AI infrastructure that will power the next industrial revolution,” says Jensen Huang, founder and CEO of Nvidia, in an Aug. 17 statement.

Nvidia is a popular chip stock that Terry Scott, founder of StockMarketWatch.com, highlights from his own portfolio. Industry estimates put Nvidia’s share of AI data center chip revenue at roughly 80% (and its data center sales growth was about 90% year over year in the latest quarter). Scott notes that his own firm’s technical database shows a fully bullish “golden alignment” across Nvidia’s moving averages. “I recently trimmed part of my AMD position after its 100%-plus run this year and added to Nvidia,” he says.

[READ: 10 Best Tech Stocks to Buy for 2026]

Advanced Micro Devices Inc. (AMD)

Trading at $506 per share as of mid-August, Santa Clara, California-based Advanced Micro Devices’ share price has come a long way in 2026, returning 136% year to date and 185% over the past year.

Wall Street pros see plenty of opportunity for more growth this year, as robust demand for the company’s AI data center central processing units (CPUs) and graphics processing units (GPUs) have slotted AMD in an ideal spot where tons of cash is being put to work. The company just issued a forecast calling for a 50% hike in revenue for the second quarter of 2026.

Investors shouldn’t be spooked about potential profit-taking on hot chip stocks that have returned well over 100% in 2026. Some experts point to Ark Invest’s Cathie Wood, who recently also sold $13.1 million AMD shares and upped her firm’s position in Nvidia shares with a $22.8 million purchase.

That’s going to happen in a volatile sector like semiconductors, and investors would be wise to get used to it. It’s better to focus on the numbers that matter, like the consensus $651.32 price target on AMD, representing a 28.7% potential run-up in share value.

Broadcom Inc. (AVGO)

Broadcom shares are treading water this summer, with the stock price up 14% year to date, pretty much where it stood in late June. AVGO shares dropped 6% on Aug. 14 following a Bank of America downgrade over news of a massive AI financing deal: In June, AVGO agreed to a $35 billion pact with Blackstone Inc. (BX) and Apollo Global Management Inc. (APO) to build an AI infrastructure platform. Costs could reach $370 billion by 2029 in a worst-case analysis, with Broadcom carrying the bulk of the financial load, BofA researchers found.

Dubbed AI XPV, the platform will provide about 20 gigawatts of computing capacity over the next two years, deploying Broadcom’s semiconductor chips and network services for high-growth AI players like Anthropic and OpenAI.

Broadcom already has a significant alliance with Anthropic that could generate additional revenues from two recent chip orders, one for $10 billion and a later order for $11 billion. In late 2025, Broadcom also announced a strategic collaboration to deploy 10 gigawatts worth of OpenAI-designed AI accelerators. Broadcom’s custom end-user chips are also used by Magnificent Seven members Alphabet Inc. (GOOG, GOOGL) and Meta Platforms Inc. (META), which is one big reason analysts estimate Broadcom’s revenues could rise by 66% in 2026, and likely much more in 2027, as AI data center chip demand shifts into even higher gear.

Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)

With the Trump administration balking at U.S. companies doing business with Chinese chip companies, you’d think Taiwan Semiconductor is facing a big uphill climb in 2026. Yet TSM shares are up a robust 42% so far in 2026, primarily driven by the chipmaker’s strong alliances with tech elites such as Nvidia, Advanced Micro Devices, Apple Inc. (AAPL) and Broadcom, as well as strong 2026 sales.

TSM is not standing still, as a new Citibank research note shows the company plans to significantly boost its capital expenditures to meet the burgeoning needs of major clients like Apple. At the same time, it wants to stave off competitors in the lucrative dedicated chip foundry market, where TSM already holds about 70% market share.

TSM has attracted the attention of billionaires such as stock picker Stanley Druckenmiller, who recently added 94,000 shares to the Duquesne Family Office portfolio; TSM now makes up about 6.5% of its 13F holdings.

In another sign of support from the company’s C-suite, senior executives are boosting their TSM stakes in 2026, with Senior Vice President Choh Fei Yeap buying 1,000 shares of TSM for $55,780 and Vice President Shyue-Shyh Lin purchasing 3,000 shares for about $164,160. Traditionally, senior executive insider buys signal support for a company’s stock, so investors may breathe easier knowing that.

Applied Materials Inc. (AMAT)

California-based Applied Materials, which specializes in advanced semiconductor equipment systems, is another industry stock that’s gaining steam in 2026. AMAT stock is up about 109% year to date.

In mid-August, AMAT reported strong quarterly results, easily besting analysts’ estimates on revenue and earnings, with the former up 24.8% to $9.12 billion. Applied Materials also updated Q4 guidance, calling for revenue of $9.75 billion to $10.75 billion.

In a highly volatile chip environment, semiconductor equipment providers like Applied Materials hold a massive competitive advantage because chipmakers cannot build next-generation hardware without the company’s specialized machinery.

“Applied Materials is especially interesting right now,” Arora says. “Its business, execution and growth prospects are stronger than they were when its stock was trading 32% higher, but the shares were punished because expectations had become excessive.”

Trading around $535 per share in mid-August, AMAT shares garnered a $690.40 price target from a consensus of 24 analysts monitored by TipRanks, which indicates upside potential of 29%.

What’s the Move for Chip Investors Going Forward?

How should semiconductor investors approach a volatile market? That depends on an individual’s situation and may require a candid conversation with a financial advisor. Newcomers historically tend to be better served by starting with broad exposure, such as that provided by a semiconductor exchange-traded fund, or ETF.

Investors should avoid chasing shares when they are running hot and instead wait for periods of price consolidation or technical pullbacks before buying.

Also, newcomers to the market often focus exclusively on the most famous brand names, but looking downstream at companies such as memory providers and power-management suppliers can offer a more balanced investing strategy, experts say. Seeking alpha requires thinking about the next step, not just what is happening now.

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7 Best Semiconductor Stocks for 2026 originally appeared on usnews.com

Update 08/18/26: This story was previously published at an earlier date and has been updated with new information.