Not Nvidia. Not AMD. 2 Chip Stocks I’d Buy Before the End of the Year.

AMD and Nvidia are two of the most popular AI chip stocks, but that may be a bit of a misnomer. The reality is that these two don’t manufacture anything; they just design and outsource the work.

That means the real chip stocks are companies like Taiwan Semiconductor (TSM -9.83%) and Micron (MU -15.22%), which actually fabricate the chips that go inside the computing units designed by AMD and Nvidia.

These two are also great investments, and I think they could soar through the end of 2026 in anticipation of a strong 2027 for the chip industry. Although these two have had a great run so far in 2026, they could each repeat in 2027.

Image source: Getty Images.

Without these two, the AI build-out isn’t the same

Micron and Taiwan Semiconductor aren’t competitors. They produce two different types of computing chips. Taiwan Semiconductor manufactures logic chips, while Micron makes memory chips. Both types are needed in every computing unit, so investing in both makes sense — you’re not betting against your own interests.

Taiwan Semiconductor has an iron grip on its industry. No other company has the amount of production capacity that it has. In fact, TSMC accounted for over 70% of global chip foundry revenue in Q2. That’s a dominant market share, underscoring why TSMC is a great investment.

The company has an excellent track record of developing new and improved chip technology, so many companies in the AI space, including AMD and Nvidia, partner with Taiwan Semiconductor to produce their chips.

TSM – Taiwan Semiconductor Manufacturing

$356.83-$38.92 (-9.83%)

NYSE · As of 1:00 PM ET 11/05/26

The memory chip industry is a different story. There isn’t much that separates one company’s memory chips from another’s, and many computing unit manufacturers can use memory from multiple producers. So the companies in this industry have no pricing power, and memory chip prices are driven by supply and demand, basically like a commodity. Think oil, wheat, or aluminum, but this commodity powers data centers.

In 2026, supply ran out while demand rose, leading to soaring chip prices. Micron and its peers benefited significantly from this action, and according to its management team, supply-demand conditions will be tighter in 2027 and 2028 than in 2026. That bodes well for Micron’s future and shows AI demand will keep its factories running at full speed for a while.

Each of these two plays a vital role in the AI build-out, yet their stocks aren’t valued as highly as you’d expect considering their positions in the industry.

MU – Micron Technology

$674.16-$121.07 (-15.22%)

NASDAQ · As of 1:02 PM ET 11/05/26

TSMC and Micron look like strong buys now

TSMC will always have a higher valuation than Micron because it is in a less volatile industry and is the clear sector leader. However, at 17 times 2027 earnings estimates, the stock is priced pretty attractively as of this writing on Nov. 4.

TSM PE Ratio (Forward 1y) data by YCharts

Micron is an even cheaper stock. Micron trades for less than 5 times forward earnings, and it’s way lower than historical levels.

MU PE Ratio (Forward) data by YCharts

Both stocks have pulled back hard in recent weeks, with Micron down about 30% over the past month and TSMC down roughly 19%. The retreat is a big part of why the multiples look so low.

This means Micron could have significant upside if the market returns it to its normal valuation. Taiwan Semiconductor will also have good upside, but it will likely underperform Micron. However, with TSMC in a more stable industry, this also provides investors with greater security over returns.

Investing an even amount in Micron and Taiwan Semiconductor makes a ton of sense right now. Micron offers potentially explosive returns, as the stock would still look reasonably valued after doubling or tripling. Taiwan Semiconductor is a bit more of a sure bet, but even it looks ready to return up to 50% next year without looking too expensive.

The AI build-out is far from over, and these two stocks are excellent options to invest in.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.