Three Resilient AI Sector Stocks Worth Considering for 2026

Finding Value in an Overheated Market

Artificial intelligence has fundamentally reshaped investor sentiment and market dynamics over recent years. While the trend has created significant wealth, it has also led to inflated valuations across many technology companies. The challenge for investors lies in separating genuinely promising opportunities from speculative plays. This analysis examines three companies with sustainable competitive advantages and reasonable valuations that could merit investment attention heading into 2026.

TSMC: Dominating the Chip Manufacturing Frontier

Taiwan Semiconductor Manufacturing (NYSE: TSM), the world’s leading semiconductor foundry, commands an extraordinary 71% share of third-party foundry spending. This dominance stems from technological superiority—companies developing cutting-edge chips have few alternatives to TSMC’s manufacturing capabilities.

The company operates within a reinforcing cycle: winning major contracts allows continued investment in R&D and equipment, which further strengthens its technological lead and attracts additional contracts. While TSMC’s overall revenue growth is expected to average 20% annually through 2029, AI-related revenue is projected to expand at a mid-40% rate during this period. Management has emphasized the explosive nature of current AI demand.

From a valuation perspective, the forward P/E ratio of 25 appears compelling given expected growth rates and the company’s ability to maintain stable gross margins while introducing advanced nodes. TSMC is charging premium prices (10-20% higher) for cutting-edge 2nm wafers while also raising prices on mature technologies. This pricing power suggests substantial operating leverage ahead, with bottom-line growth potentially exceeding the 20% revenue growth guidance.

Figma: Cloud Design Software with Embedded AI Capabilities

Figma (NYSE: FIG) operates a cloud-based design platform that has strategically integrated AI features to enhance rather than replace its core offering. The company introduced Figma Make in mid-2025, enabling rapid prototype generation through natural language commands. Initial adoption among enterprise customers has been encouraging.

The acquisition of generative image and video company Weavy represents a strategic move to expand AI capabilities across the design workflow. These product enhancements have contributed to exceptional net revenue retention—existing customers increased spending by approximately 31% year-over-year last quarter, indicating strong switching costs and network effects.

Market valuation provides a compelling entry point. The current market capitalization of $18.3 billion sits significantly below the $20 billion valuation from 2022, when acquisition efforts occurred. At an enterprise value roughly 13 times 2026 revenue estimates, the stock reflects reasonable pricing for a company exhibiting strong growth and sustainable competitive advantages. The slight compression in gross margins (from 92% to 86% as AI features scale) reflects expected operating dynamics rather than fundamental weakness.

Alibaba: Cloud Computing and AI Infrastructure at Scale

Alibaba Group (NYSE: BABA) operates China’s most extensive cloud infrastructure platform while developing proprietary large language models distributed to external developers. This positions the company as both infrastructure provider and AI innovator.

The e-commerce business faces headwinds from emerging competitors, prompting strategic investment in rapid-delivery initiatives. While this short-term investment has pressured profitability, unit economics continue improving with accelerating adoption metrics. More significantly, management is channeling retail cash flows into cloud and AI infrastructure development.

Capital deployment has been substantial—approximately 120 billion yuan ($17.2 billion) deployed over the past 12 months for AI and cloud infrastructure. This investment strategy is yielding results: cloud segment revenue accelerated 34% year-over-year last quarter, with AI-related revenue expanding at triple-digit rates. The forward enterprise value-to-EBITDA ratio below 17 suggests the market undervalues the cloud and AI growth trajectory.

Investment Considerations

These three companies share common characteristics: strong competitive moats protecting market position, reasonable valuations relative to growth prospects, and meaningful exposure to AI’s continued expansion. While no investment is without risk, each demonstrates the operational fundamentals and strategic positioning to potentially reward patient investors over the coming years.