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4 Top Chip Stocks With Dependable Earnings to Ride the AI Boom
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Key Takeaways
NVIDIA's 87.6% EPS linearity pairs with a 78.3% 10-year EPS CAGR and broadening AI demand.
TSMC leads the group with 92.3% EPS linearity as AI and HPC demand drive advanced-chip growth.
Applied Materials and Lam Research see AI, HBM and advanced packaging supporting equipment demand.
Artificial intelligence (AI) has moved from a buzzword to a spending priority. Per Gartner, global AI spending is expected to hit $2.7 trillion in 2026, up 49.5% from 2025, with AI infrastructure making up the largest share. That build-out runs on semiconductors, since every model trained and every query answered runs on chips.
But a booming theme does not guarantee a dependable business. Chip earnings are cyclical, swinging with demand, inventory and capital spending. A single strong year can make almost any company look like a winner, and investors who chase headlines often get caught when the cycle turns.
That is why the quality of earnings matters as much as their speed. EPS linearity measures how steadily earnings per share have climbed over time, with 100% representing a perfectly smooth, consistent rise. A high score indicates that growth has been more consistent rather than driven by a single strong period. Earnings durability is about whether a company can keep growing its profits through good times and bad. Used with long-term EPS growth, they help us find companies that can keep winning in the AI boom, not just for a quarter.
We have highlighted four chip stocks, NVIDIA (NVDA - Free Report) , Applied Materials (AMAT - Free Report) , Taiwan Semiconductor (TSM - Free Report) and Lam Research (LRCX - Free Report) , with a strong Zacks Rank, high EPS linearity and durable earnings.
NVIDIA
NVIDIA pairs rapid growth with steady delivery. Over the 10-year observation window in our proprietary model, its EPS linearity is 87.6%, far above the 38% industry median. On a TTM basis, our model calculates a 10-year EPS CAGR of 78.3%.
Several factors can help extend this pattern. Demand is broadening across hyperscalers, AI clouds, enterprises and sovereign buyers. NVIDIA's full-stack platform, covering CPUs, GPUs, networking, systems and CUDA software, supports training, inference and agentic AI. Its new Vera Rubin platform is starting to ramp.
The company cites 30 times higher throughput per megawatt and 35 times lower token costs than Grace Blackwell Ultra, along with orders from every major hyperscaler. NVIDIA has added $150 billion to its buyback authorization, lifting the remaining total to $235 billion.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 and 2028 EPS implies year-over-year growth of 94% and 68%, respectively. EPS estimates have also moved up over the past 60 days.
Over the 10-year observation window in our proprietary model, AMAT’s EPS linearity is 85.9%, far above the 46% industry median. On a TTM basis, our model calculates a 10-year EPS CAGR of 18.2%. The smooth earnings path has also come with meaningful growth.
Applied Materials is benefiting as AI-driven demand is shifting chipmakers' equipment spending toward leading-edge foundry-logic, DRAM and advanced packaging, where AMAT holds leading process positions. The company expects these areas to account for about 80% of wafer fab equipment growth in 2026 and 2027. It also expects advanced packaging revenues to grow more than 70% in calendar 2026, backed by demand for HBM, 3D chiplet stacking and next-generation packaging.
A broad product portfolio, rising AI-driven equipment demand and ongoing investment in manufacturing capacity support AMAT’s earnings growth.
The Zacks Consensus Estimate for AMAT’s fiscal 2026 and 2027 EPS implies year-over-year growth of 36% and 43%, respectively. EPS estimates have also moved up over the past 60 days. AMAT sports a Zacks Rank #1.
Image Source: Zacks Investment Research
Taiwan Semiconductor
Over the 10-year observation window in our proprietary model, TSMC’s EPS linearity is 92.3%, the most consistent among all four stocks highlighted. On a TTM basis, our model calculates a 10-year EPS CAGR of 28.7%, higher than the industry’s median of 15.7%.
TSMC is the world's leading semiconductor foundry, making advanced chips for many of the industry's biggest names. This puts it at the center of the AI infrastructure buildout. Demand for leading-edge chips remains immense, and sustained AI and high-performance computing demand continues to drive its growth. Management also expects continued cost improvements.
TSMC is investing heavily to meet multiyear demand. Its Arizona expansion, worth an additional $100 billion, adds more 2nm-and-below fabs and advanced packaging capacity, while 13 more leading-edge and advanced-packaging fabs are coming up in Taiwan.
The Zacks Consensus Estimate for TSMC’s 2026 and 2027 EPS implies year-over-year growth of 55% and 29%, respectively. EPS estimates have also moved up over the past 60 days. TSM carries a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
Lam Research
Over the 10-year observation window in our proprietary model, LRCX’s EPS linearity is 79.4%, above the 46% industry median. On a TTM basis, our model calculates a 10-year EPS CAGR of 23.7%.
The next leg of chip spending favors Lam Research. Memory and AI infrastructure are at the center of it. Management sees 2026 wafer fab equipment spending in the low-$150 billion range, with stronger growth expected in 2027. NAND is a key driver, as customers move to higher-layer devices that need more etch and deposition steps, which are core areas for Lam Research.
AI adds another source of demand through HBM and advanced packaging. LRCX expects packaging revenues to grow more than 70% in the calendar year 2026, backed by its expertise in TSV etch, electroplating and panel-level packaging.
The Zacks Consensus Estimate for LRCX’s fiscal 2027 and 2028 EPS implies year-over-year growth of 60% and 22%, respectively. EPS estimates for fiscal 2028 have also moved up over the past 60 days. LRCX currently carries a Zacks Rank #2.
View the Zacks #1 Rank List
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4 Top Chip Stocks With Dependable Earnings to Ride the AI Boom
Key Takeaways
Artificial intelligence (AI) has moved from a buzzword to a spending priority. Per Gartner, global AI spending is expected to hit $2.7 trillion in 2026, up 49.5% from 2025, with AI infrastructure making up the largest share. That build-out runs on semiconductors, since every model trained and every query answered runs on chips.
But a booming theme does not guarantee a dependable business. Chip earnings are cyclical, swinging with demand, inventory and capital spending. A single strong year can make almost any company look like a winner, and investors who chase headlines often get caught when the cycle turns.
That is why the quality of earnings matters as much as their speed. EPS linearity measures how steadily earnings per share have climbed over time, with 100% representing a perfectly smooth, consistent rise. A high score indicates that growth has been more consistent rather than driven by a single strong period. Earnings durability is about whether a company can keep growing its profits through good times and bad. Used with long-term EPS growth, they help us find companies that can keep winning in the AI boom, not just for a quarter.
We have highlighted four chip stocks, NVIDIA (NVDA - Free Report) , Applied Materials (AMAT - Free Report) , Taiwan Semiconductor (TSM - Free Report) and Lam Research (LRCX - Free Report) , with a strong Zacks Rank, high EPS linearity and durable earnings.
NVIDIA
NVIDIA pairs rapid growth with steady delivery. Over the 10-year observation window in our proprietary model, its EPS linearity is 87.6%, far above the 38% industry median. On a TTM basis, our model calculates a 10-year EPS CAGR of 78.3%.
Several factors can help extend this pattern. Demand is broadening across hyperscalers, AI clouds, enterprises and sovereign buyers. NVIDIA's full-stack platform, covering CPUs, GPUs, networking, systems and CUDA software, supports training, inference and agentic AI. Its new Vera Rubin platform is starting to ramp.
The company cites 30 times higher throughput per megawatt and 35 times lower token costs than Grace Blackwell Ultra, along with orders from every major hyperscaler. NVIDIA has added $150 billion to its buyback authorization, lifting the remaining total to $235 billion.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 and 2028 EPS implies year-over-year growth of 94% and 68%, respectively. EPS estimates have also moved up over the past 60 days.
NVDA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials
Over the 10-year observation window in our proprietary model, AMAT’s EPS linearity is 85.9%, far above the 46% industry median. On a TTM basis, our model calculates a 10-year EPS CAGR of 18.2%. The smooth earnings path has also come with meaningful growth.
Applied Materials is benefiting as AI-driven demand is shifting chipmakers' equipment spending toward leading-edge foundry-logic, DRAM and advanced packaging, where AMAT holds leading process positions. The company expects these areas to account for about 80% of wafer fab equipment growth in 2026 and 2027. It also expects advanced packaging revenues to grow more than 70% in calendar 2026, backed by demand for HBM, 3D chiplet stacking and next-generation packaging.
A broad product portfolio, rising AI-driven equipment demand and ongoing investment in manufacturing capacity support AMAT’s earnings growth.
The Zacks Consensus Estimate for AMAT’s fiscal 2026 and 2027 EPS implies year-over-year growth of 36% and 43%, respectively. EPS estimates have also moved up over the past 60 days. AMAT sports a Zacks Rank #1.
Taiwan Semiconductor
Over the 10-year observation window in our proprietary model, TSMC’s EPS linearity is 92.3%, the most consistent among all four stocks highlighted. On a TTM basis, our model calculates a 10-year EPS CAGR of 28.7%, higher than the industry’s median of 15.7%.
TSMC is the world's leading semiconductor foundry, making advanced chips for many of the industry's biggest names. This puts it at the center of the AI infrastructure buildout. Demand for leading-edge chips remains immense, and sustained AI and high-performance computing demand continues to drive its growth. Management also expects continued cost improvements.
TSMC is investing heavily to meet multiyear demand. Its Arizona expansion, worth an additional $100 billion, adds more 2nm-and-below fabs and advanced packaging capacity, while 13 more leading-edge and advanced-packaging fabs are coming up in Taiwan.
The Zacks Consensus Estimate for TSMC’s 2026 and 2027 EPS implies year-over-year growth of 55% and 29%, respectively. EPS estimates have also moved up over the past 60 days. TSM carries a Zacks Rank #2 (Buy).
Lam Research
Over the 10-year observation window in our proprietary model, LRCX’s EPS linearity is 79.4%, above the 46% industry median. On a TTM basis, our model calculates a 10-year EPS CAGR of 23.7%.
The next leg of chip spending favors Lam Research. Memory and AI infrastructure are at the center of it. Management sees 2026 wafer fab equipment spending in the low-$150 billion range, with stronger growth expected in 2027. NAND is a key driver, as customers move to higher-layer devices that need more etch and deposition steps, which are core areas for Lam Research.
AI adds another source of demand through HBM and advanced packaging. LRCX expects packaging revenues to grow more than 70% in the calendar year 2026, backed by its expertise in TSV etch, electroplating and panel-level packaging.
The Zacks Consensus Estimate for LRCX’s fiscal 2027 and 2028 EPS implies year-over-year growth of 60% and 22%, respectively. EPS estimates for fiscal 2028 have also moved up over the past 60 days. LRCX currently carries a Zacks Rank #2.