Semiconductor stocks are enjoying yet another terrific year, as evidenced by the 70% jump in the PHLX Semiconductor Sector index so far in 2026.
Artificial intelligence (AI), not surprisingly, has played a central role behind this red-hot rally in the semiconductor sector
Market research firm Gartner estimates that the global semiconductor industry’s revenue could increase by 64% in 2026 to $1.32 trillion. The robust demand for AI processors and networking components will power this outstanding growth. That’s why now is a good time to take a closer look at the prospects of Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD), two chip designers that have been witnessing impressive revenue and earnings growth driven by AI.
Let’s see which of these two semiconductor stocks is a better buy for 2026. Nvidia is the dominant force in AI chips, but AMD has turned out to be the better investment this year Nvidia dominates the AI chip market with an estimated share of 81%, according to market research firm IDC. This explains why the company’s revenue in fiscal 2026 (which ended on Jan. 25, 2026) shot up by 65% to a record $215.9 billion.