This article first appeared on GuruFocus.
Mizuho Securities highlighted AI-driven demand as a key factor for semiconductor stocks in 2026, naming Nvidia (NASDAQ:NVDA), Lumentum (NASDAQ:LITE), and Broadcom (NASDAQ:AVGO) as its top picks.
The firm points to strength in AI accelerators, optical networking, and advanced chips as major drivers for these names.
Nvidia benefits from continued GPU and custom AI chip sales, while Broadcom sees growth from its diversified semiconductor portfolio. Lumentum is positioned to gain from faster AI networking speeds, including 800G and 1.6T technologies.
Beyond the top picks, Mizuho also flagged Microchip Technology (MCHP) and Lam Research (LRCX) as additional companies to watch.
The firm expects demand for wafer fab equipment and memory to remain strong, benefiting Micron (MU) and SanDisk (SNDK), particularly as AI data center requirements grow.
However, Mizuho cautioned on sectors like autos, analog chips, PCs, and smartphones, citing weaker demand and elevated inventory levels.
Despite these headwinds, the firm views semiconductor valuations as attractive compared with the broader market, with AI-focused segments likely to remain the leaders in 2026.