The New Year Could Bring Massive Upside for These Semiconductor Stocks | The Motley Fool

The semiconductor industry reported stellar growth in 2025. Data compiled by the World Semiconductor Trade Statistics (WSTS) organization suggests that semiconductor sales are on track to increase by 22.5% this year to just over $772 billion. Not surprisingly, semiconductor stocks have registered solid gains this year, as evident from the 42% jump in the PHLX Semiconductor Sector index. The good news is that the industry's growth could accelerate further in 2026, with revenue forecasted to jump 26.3% to $975.4 billion. That's why now would be a good time to take a look at some of the top names in this industry that could deliver terrific gains to investors in the new year. Image source: ASML. The semiconductor industry's secular growth should supercharge these stocks The semiconductor industry is approaching the $1 trillion revenue milestone much earlier than the prior timeline of 2030. This isn't surprising, as semiconductors play a critical role in the proliferation of artificial intelligence (AI) across various verticals, including data centers , smartphones, computers, and factories. Taiwan Semiconductor Manufacturing ( TSM +0.70%), popularly known as TSMC, is one of the best ways to capitalize on the secular growth of the semiconductor market in 2026. After all, it is the world's largest chip foundry, with a market share of 72% at the end of the previous quarter, according to Counterpoint Research. What's worth noting is that TSMC's share of the foundry market improved by six percentage points year over year last quarter, as all the top chip designers have been rushing to manufacture chips on its advanced nodes. NYSE: TSM Key Data Points The chips fabricated by TSMC for customers such as Nvidia ( NVDA 0.32%), AMD , Apple , Broadcom , Qualcomm , and others, go into all the verticals of the semiconductor industry. This is why the company's growth has been outstanding this year. Analysts expect TSMC to end 2025 with a 30% jump in revenue, while the bottom line is anticipated to increase by almost 48% to $10.41 per share. There is ample evidence suggesting that TSMC's growth could accelerate next year. For instance, TSMC's production capacity of the advanced 2-nanometer (nm) node that will go into production in 2026 is anticipated to double. What's more, TSMC has reportedly sold out its entire 2nm production capacity for 2026. Additionally, TSMC's 2nm node will reportedly be priced at a premium of 10% to 20% over its current flagship -- the 3nm node. As a result, don't be surprised to see TSMC easily exceeding the 20% earnings growth analysts forecast for 2026, putting the stock on track to clock even bigger gains following its 48% jump in 2025. The fact that TSMC trades at 30 times earnings also helps, as it represents a discount to the tech-laden Nasdaq-100 index's earnings multiple of 32 (using the index as a proxy for tech stocks). The faster-than-anticipated earnings growth that it may deliver in 2026 could be rewarded with a higher earnings multiple, setting the stock up for massive gains....

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