The semiconductor sector has emerged as the primary engine of equity market strength in the first five months of 2026, fueled by an unrelenting surge in artificial intelligence (AI) investment from major cloud platforms. Year-to-date gains have been exceptional, with the iShares Semiconductor ETF (SOXX) rising 54.7%, underscoring the market’s conviction that semiconductors are the backbone of the global AI infrastructure build-out. The Philadelphia Semiconductor Index reached its highest quote ever on April 24, 2026. This powerful momentum reflects sustained demand for advanced computing capabilities, validated by strong earnings across the industry. 

Alphabet (GOOGL Quick QuoteGOOGL - Free Report) — the parent of Google — reported its first-quarter 2026 results and used the announcement to dramatically reaffirm its long-term commitment to AI infrastructure. The company updated its 2026 capital expenditure guidance range to $180 billion to $190 billion, up from its previous estimate of $175 billion to $185 billion. This places Google's 2026 spending plan among the largest single-year capital programs in corporate history, dedicated almost exclusively to AI-related infrastructure, including servers, data centers and networking equipment.

The company expects 2027 capex to "significantly increase" compared to 2026, signaling that Google views AI compute capacity as a structural priority extending well beyond the current cycle. The aggressive plan is supported by an extraordinary backlog. Cloud revenues soared 63% with a backlog of $460 billion, nearly double where it was last quarter, because of demand for AI infrastructure. Capital expenditure for the quarter alone hit $35.67 billion.

Google's spending is concentrated in three areas: custom Tensor Processing Units (TPUs) co-designed with U.S. semiconductor partners, third-party AI accelerators sourced from established chip vendors, and the supporting infrastructure of memory, networking silicon, advanced packaging, and rack-level hardware required to bring AI factories online at scale. This three-pronged approach creates direct revenue pathways for several U.S.-listed semiconductor companies, including Taiwan Semiconductor (TSM Quick QuoteTSM - Free Report) , NVIDIA (NVDA Quick QuoteNVDA - Free Report) and Broadcom (AVGO Quick QuoteAVGO - Free Report) that supply the silicon, manufacture the wafers, or co-design the custom accelerators powering Google's AI ambitions.

6-month Performance

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Semiconductors Lead Market Rally as AI Spending Surges

The need for high-performance AI chips has accelerated sharply, driven by hyperscalers expanding data center capacity and deploying next-generation systems at scale. However, supply constraints — particularly in advanced packaging technologies such as CoWoS offered by Taiwan Semiconductor — have introduced a critical bottleneck. Reportedly, Google scaled back its Tensor Processing Unit production targets due to these limitations, highlighting how foundry capacity has become a strategic advantage for leading players.

Collaboration across the semiconductor ecosystem has also intensified, strengthening the AI supply chain. NVIDIA continues to push innovation with its Vera Rubin platform, while Google Cloud has moved quickly to adopt next-generation systems. Meanwhile, Broadcom has emerged as a key partner in custom AI silicon, reporting strong growth in its AI chip segment and projecting substantial revenue expansion in the coming years. Its deepening partnership with Google, including long-term involvement in Tensor Processing Unit development, highlights the strategic alignment between chip designers and hyperscalers.

Further reinforcing this trend, Alphabet, Microsoft, Amazon and Meta Platforms have collectively increased capital expenditure expectations, with total projected spending approaching $725 billion. Unlike previous technology cycles, this wave of investment is increasingly supported by contracted cloud revenues, reducing uncertainty around demand.

Against this backdrop, companies closely tied to AI infrastructure remain strategically positioned to benefit from sustained AI-driven growth.

Broadcom: Powering Google’s Custom AI Silicon Expansion

Broadcom holds perhaps the most direct exposure to Google's custom-silicon strategy. This Zacks Rank #1 (Strong Buy) company is the lead design partner for Google's seventh-generation Ironwood TPU and has secured an extended partnership through 2031 covering future generations, including TPU v8t (training) and v8i (inference). Broadcom contributes its proprietary 9.6 Tbps SerDes interconnects, ASIC implementation expertise, and high-speed networking fabric. For first-quarter fiscal 2026 ended Feb. 1, 2026, Broadcom reported revenues of $19,311 million, up 29% from the prior-year period. First-quarter AI revenues of $8.4 billion grew 106% year over year, driven by robust demand for custom AI accelerators and AI networking. Adjusted EBITDA increased 30% year over year to a record $13.1 billion, representing 68% of revenues. Second-quarter fiscal 2026 revenue guidance of approximately $22 billion implies an increase of 47% year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for AVGO’s fiscal 2026 earnings is pegged at $11.45 per share, up 0.8% over the past 30 days, suggesting 67.9% growth from the figure reported in fiscal 2025.

NVIDIA: Driving Google Cloud’s Next-Gen AI Infrastructure

NVIDIA remains a direct beneficiary of Google's massive AI buildout through its Blackwell and Rubin platforms now deployed across Google Cloud's global data centers. Google Cloud rolled out A4 VMs, built on NVIDIA's HGX B200 GPUs, offering developers significantly faster model training and smoother deployment, with A4X VMs based on the GB200 NVL72 and announced plans to be among the first cloud providers to deploy NVIDIA Vera Rubin NVL72 rack-scale systems in the second half of 2026. For the fourth quarter ended Jan. 25, 2026, NVIDIA reported revenues of $68.1 billion, up 20% from the previous quarter and 73% from a year ago. For fiscal 2026, revenues were $215.9 billion, up 65% from a year ago. Fourth-quarter data center revenues reached a record $62.3 billion, up 75% year over year. This Zacks Rank #2 (Buy) company guided first-quarter fiscal 2027 revenues at $78 billion, plus or minus 2%. 

The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 and 2028 earnings implies a year-over-year increase of approximately 69.18% and 34.32%, respectively.

TSM: The Foundry Backbone of Google’s AI Chip Ecosystem

Taiwan Semiconductor, the world's largest contract chipmaker, manufactures the vast majority of advanced AI accelerators powering Google's expanding global data centers. TSM fabricates Google's TPUs as well as NVIDIA's Blackwell and forthcoming Rubin GPUs on its leading-edge nodes, making it the single most indispensable foundry layer of Google's $190 billion 2026 capex program. For first-quarter 2026, TSM reported revenues of $35.90 billion, which increased 40.6% year over year and 6.4% from the previous quarter in U.S. dollars. Gross margin for the quarter was 66.2%, and operating margin was 58.1%. High-performance computing accounted for 61% of revenues. The company guided second-quarter 2026 revenues to be between $39 billion and $40.2 billion, implying roughly 32% year-over-year growth at the midpoint, and raised its full-year 2026 U.S.-dollar revenue growth guidance to above 30%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 74% of total wafer revenues.

The Zacks Consensus Estimate for this Zacks Rank #3 (Hold) company’s 2026 and 2027 earnings implies a year-over-year increase of 43.1% and 24.49%, respectively.

Conclusion

Google's $180-$190 billion 2026 capex commitment cements AI infrastructure as a multi-year structural growth engine. NVIDIA, TSM and Broadcom each occupy distinct, indispensable positions within Google's AI hardware supply chain. With contracted cloud revenues underpinning visibility, all three names appear well-positioned to capture a meaningful share of this transformational opportunity ahead.