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Introduction
 

The largest semiconductor companies in the world recorded more than $400 billion in combined sales in 2025, driven by the explosive growth of artificial intelligence and next year promises to be even bigger according to some analysts. Those polled by FactSet estimate that the combined sales from Nvidia (NVDA), Intel (INTC), Broadcom (AVGO), AMD (AMD), and Qualcomm (QCOM) will top $538 billion - and that doesn’t include revenues from Google’s (GOOGL) TPU business or Amazon’s (AMZN) custom chips sales.

Challenges In 2026
 

The abovementioned being said, however, the sector faces a host of challenges, from:

• shortages of vital components such as:
  • electrical transformers,
  •  gas turbine hampers, 
  • the ultrathin layers of silicon substrate some chips require,
  • memory chips, the semiconductors that feed data to AI processors and help store the results of computations, and
•  answers to questions surrounding:
  • the sustainability of the financing behind the data-center build-out,
  • about how and when AI companies will be able to generate reliable enough profits to keep buying chips;
  • and whether major customers such as OpenAI can raise enough money quickly to keep up their breakneck pace of chip purchases. Meanwhile, investors have grown used to outsize growth in revenues from quarter to quarter and are easily spooked by concerns that the financing driving the purchase of AI infrastructure products might not be as solid as they once believed and,
  • finally, as more chip companies launch AI products, there is also some concern about pressure on profit margins, in part over investor worries that going forward sales growth will slow for higher-margin product lines. Source

Slow-Down Coming?
 

Some analysts think that the boom could slow down in 2027, while others in the industry have taken a more optimistic view that demand will be long-lasting, with consistent growth. Brad Gastwirth, global head of research for Circular Technologies, is of the opinion that 2026 will not be the sector's top saying 
“The race to artificial general intelligence is still powering a huge appetite for compute, across the spectrum of customers.” 

Our Model AI Stocks Watchlist Portfolio
 

Below is my shortlist of 12 AI-related stocks in alphabetical order. I will update its performance on a monthly basis going forward. (Click on the company name hyperlink for more information.)

1. Advanced Micro Devices (AMD)
2. Alphabet (GOOGL)
3. Amkor Technology (AMKR)
4. ASML Holding (ASML)
5. Broadcom (AVGO)
6. KLAC Corporation (KLAC)
7. Meta Platforms (META)
8. Micron Technology (MU)
9. Microsoft (MSFT)
10. Nvidia (NVDA)
11. Synopsys (SNPS)
12. Taiwan Semiconductor (TSM)

Conclusion
 

Our model AI Stocks Watchlist Portfolio of 12 stocks went UP 47.0% in 2025, slightly more than the 26 stocks in our model AI Semiconductor Stocks Portfolio (see here) that increased by 45.3%. Will it repeat in 2026? Time will tell, but it looks promising.

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