Can Semiconductor Leaders Repeat Their 2025 Success in 2026? What the Numbers Suggest

If you invested in the three semiconductor leaders I highlighted for 2025—Nvidia (NASDAQ: NVDA), Taiwan Semiconductor Manufacturing (NYSE: TSM), and ASML Holding (NASDAQ: ASML)—you’ve experienced a remarkable ride. The question now: can they repeat that performance in 2026?

The track record speaks for itself. Nvidia delivered a 39% gain throughout 2025, while Taiwan Semiconductor and ASML each surged 54%, providing the kind of exceptional returns that make headlines. But exceptional past performance doesn’t automatically guarantee future results, and as we head into 2026, investors face a critical decision: hold these positions, add to them, or explore alternatives.

Why These Three Chip Companies Drive the Entire Industry

To evaluate whether these stocks deserve your capital in 2026, it’s essential to understand the distinct roles each plays within the semiconductor ecosystem. These three companies form the backbone of modern chip production, but they operate at different stages of the supply chain.

Nvidia is the architect. The company designs cutting-edge processors, with particular emphasis on graphics processing units (GPUs). The explosion in generative AI demand has made GPUs the hardware of choice for both training and deploying large language models. No other company has captured this opportunity quite like Nvidia, positioning it as the core beneficiary of the AI infrastructure boom. However, designing chips is vastly different from manufacturing them.

Taiwan Semiconductor Manufacturing fills a critical gap. Rather than competing directly with its clients, TSMC operates as a neutral foundry—a manufacturing facility where companies like Nvidia can submit designs to be produced at scale. This arrangement allows TSMC to maintain relationships across the entire industry without creating conflicts of interest. The expertise, equipment, and precision required to manufacture advanced chips at volume remains prohibitively expensive for most companies to develop independently.

ASML operates at the infrastructure level. The Dutch manufacturer produces extreme ultraviolet lithography machines—the specialized equipment required to etch microscopic electrical traces onto semiconductor wafers. Remarkably, ASML holds a global monopoly on this technology, making it the sole supplier to every major chipmaker worldwide. As long as semiconductor demand remains elevated, ASML’s position remains virtually unassailable.

Measuring 2025’s Performance Against Growth Expectations

The 2025 results are now history, but they provide a valuable benchmark for understanding market dynamics. Nvidia’s 39% appreciation, while impressive, was the weakest performer among the three. Taiwan Semiconductor’s 54% rally and ASML’s matching 54% surge represent the kind of outperformance that captures investor attention.

Yet this historical context raises an important question: do these results align with forward-looking expectations?

Wall Street analysts currently project markedly different growth trajectories for 2026. Nvidia is expected to achieve 51% earnings growth, establishing it as the highest-growth candidate among the three. Taiwan Semiconductor’s anticipated growth of 31% remains robust but trails Nvidia’s expectations. ASML faces the slowest projected growth rate at 15%—a significant deceleration from its 2025 performance.

This divergence between past results and future expectations forms the foundation for reassessing these investments heading into 2026.

The Valuation Question: Growth vs. Price

While growth projections vary considerably across these three, their valuation multiples tell an equally important story. Here’s where the investment thesis becomes more nuanced.

Nvidia trades at approximately 25 times forward earnings, while Taiwan Semiconductor commands a multiple of 21 times forward earnings. Both represent reasonable valuations for semiconductor stocks with strong growth prospects. ASML, however, trades at a more elevated 34 times forward earnings.

This valuation disconnect raises a critical question: is ASML’s premium justified given its projected 15% growth rate—the slowest among the trio?

The market appears to be pricing in ASML’s monopolistic position and irreplaceable role in chip manufacturing. Yet from a traditional valuation perspective, paying 34 times forward earnings for a company growing at just 15% annually looks expensive relative to peers growing faster at lower multiples. This valuation gap suggests ASML may face headwinds in 2026, particularly if semiconductor spending growth moderates or if investors rotate toward higher-growth opportunities.

Why Taiwan Semiconductor and Nvidia Emerge as More Compelling Opportunities

Entering 2026, the case for favoring Taiwan Semiconductor and Nvidia appears stronger than for ASML, though each offers distinct advantages.

Taiwan Semiconductor offers a balanced profile. With projected 31% growth and a 21x forward earnings multiple, TSMC provides exposure to the semiconductor boom without the valuation premium. Its neutral foundry model ensures steady demand across the industry regardless of competitive dynamics among chip designers. The company remains indispensable to every major semiconductor manufacturer, making it a structural beneficiary of continued industry growth.

Nvidia combines the highest growth expectations (51%) with a reasonable valuation (25x forward earnings). The company’s near-monopoly on GPUs for AI applications shows no signs of diminishing. As enterprises continue deploying AI infrastructure, Nvidia remains the primary beneficiary. The 39% gain in 2025 was impressive, but if the company delivers on its 51% growth projection for 2026, the stock could repeat its outperformance.

ASML, while likely to remain a quality business, presents a less compelling opportunity at current valuations. A 15% growth rate combined with a 34x multiple suggests limited room for upside surprise. While the company could certainly deliver solid results, it lacks the growth acceleration prospects of its two peers.

Making Your 2026 Investment Decision

For investors deciding whether to hold, buy more, or take profits on these positions, the data suggests a clear hierarchy emerges. The semiconductor industry’s structural tailwinds—driven by AI adoption, data center expansion, and ongoing technology advancement—remain intact. However, not all semiconductor plays are equally attractive at current prices.

Taiwan Semiconductor and Nvidia offer better risk-reward profiles for 2026, combining meaningful growth expectations with valuations that don’t appear stretched. Whether they can repeat their 2025 surge remains uncertain, but the fundamentals favor continued outperformance relative to ASML at today’s valuations.

The semiconductor cycle is far from over, and 2026 promises to be another defining year for the industry. Your investment positioning should reflect which companies offer the best value for the growth you expect to receive.