The artificial intelligence (AI) infrastructure trade has shifted from pure-play semiconductors to other AI-powered data center infrastructure. These include AI-powered memory and storage devices as well as servers and racks, photonics and optical network manufacturers, electrical grid equipment, advanced cooling systems, and specialized semiconductor packaging to name a few.
As a result, several AI-semiconductor behemoths, which were darlings of market participants till last year, have lost their glory this year. Nevertheless, we have identified three beaten-down AI-chip giants that have the potential to surge in the second half of 2026.
The companies are: NVIDIA Corp. NVDA, Broadcom Inc. AVGO and QUALCOMM Inc. QCOM. Each of our picks currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our three picks year to date.
Image Source: Zacks Investment Research
NVIDIA Corp.
NVDA — the undisputed global leader of generative artificial intelligence (AI)-powered graphical processing units (GPUs) — continued to maintain its data center revenue momentum.
In the last reported quarter, 50% of its data center revenues came from hyperscalers. The most important fact is that the remaining 50% of revenues came from various other sources like AI Clouds, industrial, enterprise, and sovereign customers. This indicates that NVDA is strategically diversifying its customer base as AI tools are gradually being adopted in mainstream business operations.
Transformation From AI GPU to AI CPU
Besides being the generative-AI-powered GPU leader, NVIDIA is aiming to become a leading supplier of AI CPUs (central processing units). The so long dormant AI CPU space has charged up with the advent of agentic AI tools.
In this regard, NVDA’s new AI superchip — Vera Rubin — may become a game-changer. This innovative rack-scale system will deliver 10 times more performance per watt than its predecessor — Grace Blackwell.
The Vera Rubin system comprises 1.3 million components, including 72 Rubin GPUs and 36 Vera CPUs. NVIDIA will start the shipment of Vera Rubin in the second half of 2026. It had earlier announced the roadmap for Rubin Ultra, likely to be introduced in late 2027, and Feynman AI chips to be launched in 2028.
CEO Jensen Huang said, “agentic AI has arrived” and the factory buildout is “accelerating at extraordinary speed.” Huang also said that Vera Rubin, will be “even more successful than Grace Blackwell.” Chief Financial Officer Colette Kress said the new Vera CPU “opens a brand new $200 billion tab for NVIDIA.”
Solid Estimate Revisions
For fiscal 2027 (ending January 2027), the Zacks Consensus Estimate currently shows revenues of $385.5 billion, suggesting an improvement of 78.5% year over year and earnings per share of $9, indicating an increase of 88.7% year over year. The Zacks Consensus Estimate for the current year has improved 0.6% in the last 30 days.
For fiscal 2028 (ending January 2028), the Zacks Consensus Estimate currently shows revenues of $521.8 billion, suggesting an improvement of 35.4% year over year and earnings per share of $12.14, indicating an increase of 34.8% year over year. The Zacks Consensus Estimate for the next year has improved 0.9% in the last 30 days.
Image Source: Zacks Investment Research
Attractive Valuation of NVDA Shares
NVIDIA has a return on equity (ROE) of 96.94% compared with the industry’s ROE of a mere 5.58%. It has a forward P/E (price/earnings) multiple of 21.65% compared with the industry’s P/E of 54.68%.
Broadcom Inc.
Broadcom is experiencing strong revenue momentum fueled by growth in AI semiconductors and continued success with its VMware integration. Strong demand for its networking products and custom AI accelerators (XPUs) has been noteworthy.
AVGO said the upside was powered by AI semiconductors, with networking representing almost 40% of AI revenues in the last reported quarter. AVGO expects AI semiconductor revenues to accelerate to $16 billion in the third quarter of fiscal 2026, soaring more than 200% year over year, primarily due to its thriving AI semiconductor solutions, including custom AI accelerators and AI networking.
Major Catalysts
Broadcom’s relationships with leading OEMs and hyperscale customers across multiple target markets have helped it gain key insights into customer requirements. This insight has helped AVGO to serve target markets more efficiently. The company’s relationship with six core AI XPU customers is deep, strategic and multiyear.
AVGO’s AI segment benefits from custom accelerators and advanced networking technology that support large-scale AI deployments with improved performance and efficiency. XPUs are necessary to train generative AI models, and they require complex integration of compute, memory and I/O capabilities to achieve the required performance at lower power consumption and cost.
Solid Estimate Revisions
For fiscal 2026 (ending October 2026), the Zacks Consensus Estimate currently shows revenues of $105.6 billion, suggesting an improvement of 65.3% year over year and earnings per share of $11.73, indicating an increase of 72% year over year. The Zacks Consensus Estimate for the current year has improved 2.4% in the last 30 days.
For fiscal 2027 (ending October 2027), the Zacks Consensus Estimate currently shows revenues of $171.5 billion, suggesting an improvement of 62.4% year over year and earnings per share of $19.17, indicating an increase of 63.4% year over year. The Zacks Consensus Estimate for the next year has improved 5.6% in the last 30 days.
Image Source: Zacks Investment Research
Attractive Valuation of AVGO Shares
Broadcom has a return on equity (ROE) of 41.61% compared with the industry’s ROE of a mere 3.95%. It has a forward P/E multiple of 30.73% compared with the industry’s P/E of 49.81%.
QUALCOMM Inc.
QUALCOMM continues to pivot from a handset-centric model toward a broader connected processor portfolio. Solid traction in the automotive business augurs well, with more than 1 million cars operating ADAS and autonomy on Snapdragon Ride processors. Higher content per vehicle on the Snapdragon Digital Chassis, broader edge AI adoption across devices and data center traction are positives.
Business Diversification
QUALCOMM is investing to extend its Oryon CPU and AI acceleration beyond smartphones into PCs and servers. Management said its 2026 Snapdragon X2 PC platforms are in production and positioned to enable always-on agentic experiences, supported by a Hexagon NPU delivering up to 85 TOPS.
QCOM also said that the Alphawave integration is off to a good start and that it is pursuing opportunities with hyperscalers and other partners. QCOM is entering the custom silicon space with a leading hyperscaler and expects initial shipments in the December quarter, adding a revenue stream that is not tied to handset unit cycles.
The Alphawave acquisition, completed in fiscal 2026 for $2.3 billion, adds high-speed wired connectivity IP and custom silicon capabilities intended to accelerate QCOM’s expansion into data centers.
Strong Estimate Revisions
For fiscal 2027 (ending September 2027), the Zacks Consensus Estimate currently shows revenues of $43.6 billion, suggesting an improvement of 2% year over year and earnings per share of $10.96, indicating an increase of 1.8% year over year. The Zacks Consensus Estimate for the next year has improved 1.8% in the last 30 days.
Image Source: Zacks Investment Research
Lucrative Valuation of QCOM Shares
QUALCOMM has a return on equity (ROE) of 42.11% compared with the industry’s ROE of a mere 3.95%. It has a forward P/E multiple of 16.37% compared with the industry’s P/E of 49.81%. Moreover, the company has a P/S (price/sales) multiple of 4.18% compared with the industry’s P/S of 7.59%.
Beyond Nvidia: AI’s Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren’t likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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