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

Nvidia Corp. dominates coverage of the semiconductor manufacturing space, and rightfully so. But many other chip makers are expected to bring in impressive numbers over the next couple of years.

Nvidia NVDA has dominated the market for graphics processing units deployed by data centers to support the development of artificial intelligence technology by their corporate customers. The company has seen dramatic increases in revenue over the past five reported fiscal quarters. Nvidia’s market capitalization rose to $2.61 trillion from $358 billion two years ago. The company’s shares now make up 5.7% of the SPDR S&P 500 ETF Trust SPY, the oldest and largest exchange-traded fund that tracks the S&P 500 SPX. Only Apple Inc. AAPL and Microsoft Corp. MSFTs are weighted more heavily in the index.

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Nvidia doubled its sales last year and expects to do the same this year. The company probably won’t be able to maintain that rapid growth rate going forward, but it’s still expected to grow relatively quickly in its sector.

Analysts on average are modeling a nearly 33% compound annual growth rate for Nvidia’s revenue through calendar 2026. This is notable as some investors have begun to worry about Nvidia’s growth potential for calendar 2026, especially in light of a less dramatic declines in revenue in the last quarter. and widespread questions about the return on investment for AI spending. If big cloud customers and others don’t see enough revenue from AI to justify their investments, they may be less inclined to put more money into AI hardware.

Screening semiconductor stocks

When a company essentially creates a large and profitable new market, the competition can be expected to up their game and eventually take share. Or perhaps in Nvidia’s case, there will be a hiatus for GPU deployment as companies that invest so heavily in new hardware feel the pressure to turn a profit from AI-related products and services.

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So this is a good time to look ahead. We can do this by calculating the expected compound growth rates for the revenue of the semiconductor industry players over the next two years.

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

Next, we looked at revenue estimates for calendar years through 2026 among analysts surveyed by FactSet to see which companies are expected to show 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 match the calendar. For example, on August 28, Nvidia announced results for the second quarter of fiscal year 2025.

Among the 61 companies in our original group of semiconductor and related equipment manufacturers and designers, consensus sales estimates were available through calendar 2026 for 53 companies.

Among the remaining 53 companies, there are 17 that are expected to grow sales at an annual rate of more than 20% from calendar 2024 to calendar 2026. Calendar year sales estimates are in the millions.

To put these estimated 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 weighting of a maximum of 8% when the underlying index is rebalanced quarterly.

Shares of SolarEdge Technologies Inc. SEDGs, which top the list, have had a brutal year, falling more than 80% during 2024 to date. The company manufactures technology for solar power generation and has been affected by a weak solar market and general pressure on the sector.

Despite analysts’ predictions of rapid sales growth going forward, the company faces financial challenges elsewhere. In launching coverage of SolarEdge shares with a hold rating earlier this month, Jefferies analyst Julien Dumoulin-Smith said “the way forward is opaque with continued negative (free cash flow).” SolarEdge has also become a popular short, with short interest amounting to more than 30% of the float, according to FactSet data.

Other solar parts, including Enphase Energy Inc. ENPH, also ranks among the estimated top selling manufacturers. “We recognize the re-acceleration of future growth, but ultimately we see recovery and upside from domestic content priced at execution risk going forward,” Dumoulin-Smith wrote in taking coverage of Enphase shares, also with a hold rating.

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

Next Silicon Laboratories Inc. SLAB, an analog and mixed-signal chip company, is expected to post its second consecutive calendar year of declining sales in 2024 before rebounding strongly through 2026.

This bucks a general trend in the semiconductor sector. If you’re just focusing on the AI ​​craze, you might think that the chip sector is universal, but many areas of the market, including automotive and industrial semiconductors, have been under pressure recently. This sets companies up for potentially large revenue recoveries if their end markets change.

The issue of Nvidia’s calendar 2026 forecast is particularly timely as investors ponder AI’s return. Mizuho desk analyst Jordan Klein wrote ahead of Nvidia’s late August earnings report that the main buy-side question concerns the outlook for cloud capital spending growth in calendar 2026 versus calendar 2025.

“Nobody really knows,” he wrote. “Investors feel good about this year and 2025 for sure, but in 6-8 months, (Nvidia shares) will change (calendar year 2026 estimates) and they will rely heavily on the biggest buyers of GPU and AI computing, or cloud hyperscalers. (compared to sovereigns, enterprises, edge devices).”

Meanwhile, rival Advanced Micro Devices Inc. AMD is just outside the top 10 in terms of expected CAGR through 2026. The company is trying to capture Nvidia’s dominant market share in AI GPUs and could also benefit if some of its non-AI businesses recover. For example, AMD’s gaming business saw revenue drop 61% last quarter, and is expected to post sharp declines in the next two as well before returning to positive growth territory.

On AI, there are plenty of market opportunities for AMD in the near term, but its rival is certainly not standing still. Nvidia is targeting a one-year product cadence for new offerings, which should keep AMD on its toes.

Leaving the group in the same order, here’s a summary of views for these stocks among analysts working for brokerage firms surveyed by FactSet:

Click tickers for more on each company, including news coverage, stock charts, price ratios and financials.

Click here for Tomi Kilgore’s guide to the wealth of information available for free on the MarketWatch quote page.

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