My Top 3 Chip Stocks for 2025 Crushed the Market. Here's Why They Can Repeat Again in 2026.
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By Keithen Drury – Jan 24, 2026 at 5:45PM ESTKey PointsNvidia designs cutting-edge chips for its GPUs.Taiwan Semiconductor produces Nvidia's chip designs.ASML provides specialized machines for chip manufacturing.CEO says this is worth 18 Nvidias. Will this make the world's first trillionaire? ›NASDAQ: NVDANvidiaMarket Cap$4.6TToday's Changeangle-down(1.60%) $2.95Current Price$187.79Price as of January 23, 2026 at 3:58 PM ETAI spending is expected to stay elevated in 2026.If you followed my advice for the three chip stocks I recommended in 2025, you're probably a happy investor. I recommended you purchase Nvidia (NVDA +1.60%), Taiwan Semiconductor Manufacturing (TSM +2.21%), and ASML Holding (ASML 0.44%) for 2025, and if you did that and held on, you made a huge profit. The "worst" performer (if you can even call it that) was Nvidia, which rose 39%. Taiwan Semiconductor and ASML each increased by 54%, delivering monstrous gains. Regardless of whether you followed my advice or not, every investor must make a decision on whether these stocks are worth holding on to or buying more of in 2026. I think there are two I'd much rather own, although each of them could still beat the market. Image source: Getty Images. Each stock represents a different part of the chip supply chain These three companies all play different roles in the chip industry. Nvidia designs chips, specifically for its graphics processing units (GPUs). GPUs have become the top option to train and run generative AI workloads, and the demand they have created is unprecedented. However, Nvidia only designs the chips; it doesn't manufacture them. ExpandNASDAQ: NVDANvidiaToday's Change(1.60%) $2.95Current Price$187.79Key Data PointsMarket Cap$4.6TDay's Range$186.83 - $189.6052wk Range$86.62 - $212.19Volume4.7MAvg Vol187MGross Margin70.05%Dividend Yield0.02% That's where Taiwan Semiconductor comes in. It operates a chip factory where clients can give it designs, and it produces them. This is a great relationship, as it allows Taiwan Semiconductor to stay neutral. It's only offering its foundry capabilities, versus competing against Nvidia. Part of the reason companies like Nvidia don't produce their own chips is the massive amount of equipment and expertise required to manufacture cutting-edge chips. This process requires expensive and specialized machines, such as those made by ASML. ExpandNASDAQ: ASMLASMLToday's Change(-0.44%) $-6.15Current Price$1388.85Key Data PointsMarket Cap$538BDay's Range$1363.78 - $1393.3352wk Range$578.51 - $1398.80Volume98KAvg Vol1.5MGross Margin52.70%Dividend Yield0.53% ASML makes extreme ultraviolet lithography machines, which help lay the tiny electrical traces on chips. ASML is the only company in the world with this technology, so it's guaranteed growth as long as chip demand continues to rise. All three of these companies are vital, but which ones are buys for 2026? ASML has gotten expensive for its growth For the next fiscal year, Wall Street analysts expect 51% growth for Nvidia, 31% for Taiwan Semiconductor, and 15% from ASML. There's a clear break in expectations for these three. Yet they trade at differing valuations. ASML trades for 34 times forward earnings, while Nvidia and Taiwan Semiconductor trade for 25 and 21 times forward earnings, respectively. ASML has gotten too expensive for its relatively slow growth rate, so I think Taiwan Semiconductor and Nvidia are much better buys. While ASML can still deliver strong results, I'm more confident in the other two for 2026.Read NextJan 24, 2026 •By Manali Pradhan, CFA2 Quantum Computing Stocks to Buy in Early 2026Jan 24, 2026 •By Stefon WaltersIf You'd Invested $1,000 in Nvidia 5 Years Ago, Here's How Much You'd Have TodayJan 24, 2026 •By Geoffrey SeilerWhat Are the 3 Top Artificial Intelligence (AI) Stocks to Buy Right Now?Jan 24, 2026 •By Trevor JennewineThe 4 Best AI Stocks to Buy as Trillion-Dollar Tech Shapes a Once-in-a-Lifetime Investment OpportunityJan 24, 2026 •By Danny Vena, CPAChina Poised to Approve Nvidia's H200 Chips for Import. Here's What It Means for InvestorsJan 24, 2026 •By Trevor Jennewine2 AI Stocks to Buy Before They Soar to $20 Trillion, According to Wall Street ExpertsAbout the AuthorKeithen Drury is a contributing Motley Fool technology analyst covering AI, semiconductors, cybersecurity, and SaaS stocks. In addition to The Motley Fool, Keithen is a mechanical engineer and has held roles at Honeywell and smaller industrial companies like Brand Hydraulics and Lincoln Industries. He holds a bachelor’s degree in mechanical engineering from Dordt University.TMFTripleOptionStocks MentionedNvidiaNASDAQ: NVDA$187.79 (+0.02%) $+2.95ASMLNASDAQ: ASML$1388.85 (0.00%) $6.15Taiwan Semiconductor ManufacturingNYSE: TSM$334.61 (+0.02%) $+7.24*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.