Nvidia is expected to grow rapidly through 2026. These companies could grow even faster.

Authors: Emily Bary and Philip van Doorn

The vast majority of analysts still believe that Nvidia stock is a good buy and expect the stock to see significant growth over the next year.

Nvidia Corp. dominates the semiconductor space, and rightly so. But many other chipmakers are expected to post impressive results over the next two years.

Nvidia (NVDA) has dominated the market for graphics processing units deployed by data centers to support enterprise customers’ AI technology development. The company has seen dramatic revenue growth over the past five reported fiscal quarters. Nvidia’s market capitalization has risen to $2.61 trillion from $358 billion two years ago. The company’s stock now accounts for 5.7% of the SPDR S&P 500 ETF Trust SPY, the oldest and largest exchange-traded fund tracking the S&P 500 SPX. Only Apple Inc. (AAPL) and Microsoft Corp. (MSFT) are more heavily weighted in the index.

Nvidia doubled its sales last calendar year and is expected to do the same this year. The company likely won’t be able to maintain such rapid growth rates in the future, but it’s still expected to be a relatively fast-growing player in its sector.

Analysts on average are forecasting a nearly 33% compound annual growth rate for Nvidia’s revenue through calendar year 2026. That’s notable because some investors have begun to worry about Nvidia’s growth potential through calendar year 2026, especially in light of the less dramatic revenue decline in the last quarter and questions about the return on investment for AI spending. If large cloud customers and others don’t see enough revenue from AI to justify their investments, they may be less willing to invest more money in AI hardware.

Sifting Through Semiconductor Stocks

When a company essentially creates a large and lucrative new market, you might expect competitors to step up and eventually take share. Or, in Nvidia’s case, maybe there’s a respite for GPU implementations as companies investing so heavily in new hardware feel pressure to profit from AI-related products and services.

It’s a good time to look ahead. We can do that by calculating expected compound growth rates for semiconductor industry revenues over the next two years.

In this screen, we started with the 30 components of the iShares Semiconductor ETF SOXX, which tracks the PHLX Semiconductor Index SOX. We then added 31 additional companies in the S&P 1500 Composite Index XX:SP1500 that operate in the semiconductor industry, as defined by FactSet, or in the Semiconductors and Semiconductor Equipment Global Industry Classification Standard, as defined in the companies’ filings with the Securities and Exchange Commission. The S&P Composite 1500 Index is comprised of the S&P 500 SPX, the S&P MidCap 400 Index MID, and the S&P Small Cap 600 Index SML.

We then looked at calendar-year revenue estimates through 2026 among analysts surveyed by FactSet to see which companies were expected to post the highest two-year sales CAGR. We used calendar-year estimates, adjusted by FactSet, because many companies confuse investors with fiscal years that don’t align with the calendar. For example, on Aug. 28, Nvidia reported results for the second quarter of its fiscal 2025 year.

Of the 61 companies in our initial group of manufacturers and designers of semiconductors and related equipment, consensus sales estimates through calendar year 2026 were available for 53 companies.

Of the remaining 53 companies, 17 are expected to see annualized sales growth of more than 20% from calendar year 2024 to calendar year 2026. Calendar year sales estimates are in millions.

   Company                                      Ticker   Expected two-year sales CAGR through 2026  Est. 2024 sales  Est. 2025 sales  Est. 2026 sales 
   SolarEdge Technologies Inc.                   SEDG                                        45.1%           $1,089           $1,905           $2,294 
   Wolfspeed Inc.                                WOLF                                        39.8%             $868           $1,150           $1,696 
   Silicon Laboratories Inc.                     SLAB                                        33.2%             $603             $903           $1,070 
   Nvidia Corp.                                  NVDA                                        32.9%         $120,095         $174,920         $212,166 
   Enphase Energy Inc.                           ENPH                                        30.1%           $1,400           $2,026           $2,369 
   Cohu Inc.                                     COHU                                        28.4%             $406             $531             $670 
   SiTime Corp.                                  SITM                                        26.5%             $191             $245             $305 
   Marvell Technology Inc.                       MRVL                                        26.5%           $5,531           $7,289           $8,850 
   MaxLinear Inc.                                MXL                                         24.8%             $357             $446             $556 
   Micron Technology Inc.                         MU                                         24.4%          $29,600          $40,738          $45,781 
   Advanced Micro Devices Inc.                   AMD                                         24.1%          $25,599          $32,819          $39,448 
   First Solar Inc.                              FSLR                                        22.4%           $4,489           $5,670           $6,723 
   Teradyne Inc.                                 TER                                         22.4%           $2,786           $3,424           $4,171 
   ASML Holding NV ADR                           ASML                                        20.8%          $30,358          $40,016          $44,314 
   Onto Innovation Inc.                          ONTO                                        20.7%             $980           $1,157           $1,429 
   Universal Display Corp.                       OLED                                        20.3%             $663             $757             $960 
   Taiwan Semiconductor Manufacturing Co. ADR    TSM                                         20.1%          $86,576         $106,839         $124,840 
                                                                                                                                      Source: FactSet

To put these expected revenue growth rates into perspective, the estimated two-year sales CAGR through 2026 for the PHLX Semiconductor Index is 17.1%. This index has a modified market capitalization weight with a maximum of 8% when the underlying index is rebalanced quarterly.

SolarEdge Technologies Inc. (SEDG), which leads the list, has had a brutal year, falling more than 80% so far in 2024. The company creates technology to generate solar energy and has been hurt by a weak solar market and overall sector pressures.

Despite analysts’ predictions of rapid future sales growth, the company faces financial challenges elsewhere. Initiating coverage of SolarEdge shares with a hold rating earlier this month, Jefferies analyst Julien Dumoulin-Smith said the “path forward is unclear with continued negative (free cash flow).” SolarEdge has also become a popular short-term play, with short interest accounting for more than 30% of its capital, according to FactSet data.

Other solar stocks, including Enphase Energy Inc. (ENPH), also rank among the best-forecasted sales growth. “We see a renewed acceleration in growth, but ultimately see the recovery and growth from domestic content being priced in with execution risk,” Dumoulin-Smith wrote of Enphase stock, also with a Hold rating.

Wolfspeed Inc. (WOLF) ranks second on the list in terms of expected sales CAGR through 2026. The company specializes in manufacturing silicon carbide electronic components for electric vehicles. It also supplies components for charging and energy storage devices. The company is not expected to post a quarterly profit for at least the next two years, according to FactSet consensus estimates. Most analysts have neutral ratings on Wolfspeed stock. In a note to clients on Aug. 22, following the company’s latest quarterly report, Oppenheimer analyst Colin Rusch wrote that some investor concerns about the company’s financial health have been addressed by the cut in planned capital spending and expectations for federal funding through the CHIPS Act.

Next up is Silicon Laboratories Inc. (SLAB), an analog and mixed-signal company that is expected to see a second straight year of declining sales in 2024 before seeing a big rebound in 2026.

This is hitting a broader trend in the semiconductor sector. If you focus only on the AI craze, you might think the chip sector is universally hot, but many areas of the market, including automotive and industrial semiconductors, have recently come under pressure. This sets up companies for a large potential revenue recovery if their target markets turn around.

The question of Nvidia’s 2026 forecast is particularly timely as investors think about AI returns. Mizuho desk analyst Jordan Klein wrote ahead of Nvidia’s late-August earnings report that the biggest buy-side question is the prospects for cloud capital spending growth in 2026 versus 2025.

“Nobody really knows,” he wrote. “Investors are certainly feeling good about this year and 2025, but in 6-8 months, (Nvidia stock) will be changing (calendar year 2026 estimates), and those will be largely reliant on the largest buyers of GPUs and AI compute, or cloud hyperscalers (vs. sovereign, enterprise, edge devices).”

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09-14-24 0539ET