Meet My Top Artificial Intelligence (AI) Stock Pick for 2026

Group 1: AI Investment Trends - The AI boom is expected to reach new heights by 2026, with AI investing remaining the dominant theme since its inception in 2023 [1] - AI hyperscalers are projected to spend hundreds of billions of dollars on AI computing infrastructure in 2026, surpassing records set in 2025 [2] Group 2: Competitive Landscape - Nvidia has been a leading beneficiary of the AI boom, becoming the largest company by market cap and showing strong performance since 2023 [3] - AMD is enhancing its software in collaboration with OpenAI, while Broadcom is forming partnerships to develop custom AI chips that can outperform GPUs at lower costs [4] Group 3: Taiwan Semiconductor's Position - Taiwan Semiconductor (TSM) is identified as a way to invest in the AI sector without betting on a single winner, as it supplies chips to major players like Nvidia, AMD, and Broadcom [5] - TSMC is the world's leading chip foundry, producing a significant portion of high-end chips for AI hyperscalers, and has achieved impressive manufacturing yields [7][9] Group 4: Technological Advancements - TSMC is launching a new 2nm chip node that offers 25% to 30% less power consumption compared to the previous 3nm generation, which is crucial for the energy-intensive AI buildout [8] - The new chips are entering production, with benefits expected to materialize in the coming quarters [9] Group 5: Financial Performance - TSMC's revenue grew by 41% year over year in Q3, outpacing growth rates of competitors like Broadcom and AMD, and only trailing Nvidia's 56% growth [10] - TSMC is also improving profitability despite significant expansion plans, including new facilities in the U.S. and globally [11] Group 6: Valuation Perspective - Despite TSMC's rapid growth and strong performance, it trades at a lower valuation compared to its competitors, suggesting it is undervalued [13] - Given its growth rate and lower price tag, TSMC is considered a strong buy to capitalize on the AI buildout, with expectations of becoming a top performer in 2026 [15]