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2 AI Infrastructure Stocks That Could Outperform NVIDIA
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Key Takeaways
Micron expects higher Q4 FY2026 revenues as AI memory demand and pricing power remain strong.
TSMC posted strong Q2 growth and expects another quarter of double-digit sequential revenue growth.
Micron and TSMC project robust earnings growth, supported by sustained AI infrastructure demand.
Despite delivering strong quarterly results that have consistently surpassed expectations this year, NVIDIA Corporation’s (NVDA - Free Report) stock has gained only 10.9%. This suggests that investors have high expectations for the company that go beyond quarterly results. Given its massive scale, delivering the outsized returns seen in recent years seems increasingly challenging.
Even though demand for NVIDIA’s cutting-edge artificial intelligence (AI) chips remains strong, any slowdown in AI-related spending by hyperscale cloud providers could impact the company’s revenues and margins. Additionally, NVIDIA faces stiff competition from rivals like Advanced Micro Devices (AMD - Free Report) , while tighter U.S. export curbs on advanced chips to China and ongoing geopolitical tensions continue to constrain NVIDIA’s growth potential.
As NVIDIA’s growth normalizes, investors seeking strong upside should invest in AI infrastructure leaders Micron Technology, Inc. (MU - Free Report) and Taiwan Semiconductor Manufacturing Company Limited (TSM - Free Report) , better known as TSMC. The two stocks have gained 242.4% and 39.9%, respectively, so far this year and are likely to extend their outperformance over NVIDIA, driven by strong growth trends. Let’s see in detail –
Micron’s AI Memory Leadership Fuels Explosive Growth
As hyperscalers ramped up spending on AI infrastructure, demand for Micron’s state-of-the-art high-bandwidth memory (HBM) chips has surged. The HBM chips are in demand because they manage complex AI workloads efficiently, while delivering greater power efficiency. This momentum helped Micron post revenues of $41.46 billion in the fiscal third quarter of 2026, up 74% sequentially, according to investors.micron.com.
Micron expects revenues to rise further to $50 billion in the fiscal fourth quarter of 2026, supported by continued strength in AI memory demand. Higher sales of high-value memory products coupled with improved pricing power lifted Micron’s gross margin to 84.6% in the fiscal third quarter from 37.7% in the year-ago period. Additionally, strategic agreements with Anthropic and a strong cash position have improved the company’s long-term demand visibility and strengthened its growth outlook.
As a result, Micron’s expected earnings growth rate for the current year is 790.8%. The Zacks Consensus Estimate of $73.85 for MU’s earnings per share (EPS) is up 501.9% year over year.
Image Source: Zacks Investment Research
AI Tailwind and Margin Strength Back TSMC’s Long-Term Upside
For the second quarter ended on June 30, 2026, TSMC reported revenues of NT$1.27 trillion, up 36% year over year and 12% sequentially, according to investor.tsmc.com. Looking ahead, management expects TSMC to deliver another double-digit sequential revenue growth in the third quarter.
The company’s net income for the second quarter came in at NT$706.56 billion, up 77.4% year over year and 23.4% quarter over quarter. Earnings outpacing revenue growth underscored TSMC’s strong profitability. It also reflected the robust demand for the company’s advanced semiconductor technologies despite huge scale.
TSMC’s leadership in manufacturing advanced semiconductors has made it a cornerstone of the rapidly evolving AI ecosystem, supporting sustained long-term growth. TSMC posted a net profit margin of 55.6% in the second quarter, significantly higher than that of most semiconductor peers, reflecting its technological leadership in chip manufacturing, operational efficiency and strong pricing power.
Consequently, TSMC’s expected earnings growth rate for the current year is 50.7%. The Zacks Consensus Estimate of $16.21 for TSM’s EPS is up 47.1% year over year.
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Image: Bigstock
2 AI Infrastructure Stocks That Could Outperform NVIDIA
Key Takeaways
Despite delivering strong quarterly results that have consistently surpassed expectations this year, NVIDIA Corporation’s (NVDA - Free Report) stock has gained only 10.9%. This suggests that investors have high expectations for the company that go beyond quarterly results. Given its massive scale, delivering the outsized returns seen in recent years seems increasingly challenging.
Even though demand for NVIDIA’s cutting-edge artificial intelligence (AI) chips remains strong, any slowdown in AI-related spending by hyperscale cloud providers could impact the company’s revenues and margins. Additionally, NVIDIA faces stiff competition from rivals like Advanced Micro Devices (AMD - Free Report) , while tighter U.S. export curbs on advanced chips to China and ongoing geopolitical tensions continue to constrain NVIDIA’s growth potential.
As NVIDIA’s growth normalizes, investors seeking strong upside should invest in AI infrastructure leaders Micron Technology, Inc. (MU - Free Report) and Taiwan Semiconductor Manufacturing Company Limited (TSM - Free Report) , better known as TSMC. The two stocks have gained 242.4% and 39.9%, respectively, so far this year and are likely to extend their outperformance over NVIDIA, driven by strong growth trends. Let’s see in detail –
Micron’s AI Memory Leadership Fuels Explosive Growth
As hyperscalers ramped up spending on AI infrastructure, demand for Micron’s state-of-the-art high-bandwidth memory (HBM) chips has surged. The HBM chips are in demand because they manage complex AI workloads efficiently, while delivering greater power efficiency. This momentum helped Micron post revenues of $41.46 billion in the fiscal third quarter of 2026, up 74% sequentially, according to investors.micron.com.
Micron expects revenues to rise further to $50 billion in the fiscal fourth quarter of 2026, supported by continued strength in AI memory demand. Higher sales of high-value memory products coupled with improved pricing power lifted Micron’s gross margin to 84.6% in the fiscal third quarter from 37.7% in the year-ago period. Additionally, strategic agreements with Anthropic and a strong cash position have improved the company’s long-term demand visibility and strengthened its growth outlook.
As a result, Micron’s expected earnings growth rate for the current year is 790.8%. The Zacks Consensus Estimate of $73.85 for MU’s earnings per share (EPS) is up 501.9% year over year.
Image Source: Zacks Investment Research
AI Tailwind and Margin Strength Back TSMC’s Long-Term Upside
For the second quarter ended on June 30, 2026, TSMC reported revenues of NT$1.27 trillion, up 36% year over year and 12% sequentially, according to investor.tsmc.com. Looking ahead, management expects TSMC to deliver another double-digit sequential revenue growth in the third quarter.
The company’s net income for the second quarter came in at NT$706.56 billion, up 77.4% year over year and 23.4% quarter over quarter. Earnings outpacing revenue growth underscored TSMC’s strong profitability. It also reflected the robust demand for the company’s advanced semiconductor technologies despite huge scale.
TSMC’s leadership in manufacturing advanced semiconductors has made it a cornerstone of the rapidly evolving AI ecosystem, supporting sustained long-term growth. TSMC posted a net profit margin of 55.6% in the second quarter, significantly higher than that of most semiconductor peers, reflecting its technological leadership in chip manufacturing, operational efficiency and strong pricing power.
Consequently, TSMC’s expected earnings growth rate for the current year is 50.7%. The Zacks Consensus Estimate of $16.21 for TSM’s EPS is up 47.1% year over year.
Image Source: Zacks Investment Research
Both Micron and TSMC currently have a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.