My Top 3 Chip Stocks for 2025 Crushed the Market. Here’s Why They Can Repeat Again in 2026.
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Nvidia designs cutting-edge chips for its GPUs.
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Taiwan Semiconductor produces Nvidia’s chip designs.
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ASML provides specialized machines for chip manufacturing.
If you followed my advice For the three chip stocks I recommend in 2025, You’re probably a happy investor. I recommended you buy Nvidia (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing (NYSE: TSM)And ASML Holding (NASDAQ:ASML) For 2025, if you do this and keep going, you’ve made a big profit.
The “worst” performer (we might even call it that) was Nvidia, up 39%. Taiwan Semiconductor and ASML posted massive gains, rising 54% each. Regardless of whether you follow my advice, every investor must decide whether it’s worth holding these stocks or buying more in 2026. I think there are two stocks I’d rather own, but either could still beat the market.
These three companies all play different roles in the chip industry. Nvidia designs chips specifically graphics processing units (GPUs). GPUs have become the best choice for training and running productive AI workloads, and the demand they are creating is unprecedented. But Nvidia only designs the chips; does not produce them.
This is where Taiwan Semiconductor comes into play. He runs a chip factory where customers can give him designs and he produces them. This is a great relationship because it allows Taiwan Semiconductor to remain neutral. Instead of competing against Nvidia, it only offers foundry capabilities. One reason companies like Nvidia don’t produce their own chips is the massive amount of equipment and expertise required to produce cutting-edge chips. This process requires expensive and specialized machines, such as those manufactured by ASML.
ASML produces extreme ultraviolet lithography machines that help leave tiny electrical traces on chips. Since ASML is the only company in the world with this technology, growth is guaranteed as long as chip demand continues to increase.
All three of these companies are vital, but which ones to buy for 2026?
Next fiscal year, Wall Street analysts expect growth of 51% for Nvidia, 31% for Taiwan Semiconductor and 15% for ASML. There is a clear break in expectations regarding these three. But they trade at different valuations.
ASML trades at 34 times forward earnings, while Nvidia and Taiwan Semiconductor trade at 25 and 21 times forward earnings, respectively. ASML has become very expensive due to its relatively slow growth rate, so I think Taiwan Semiconductor and Nvidia are much better buys. While ASML can still deliver strong results, I have more confidence in the other two for 2026.
