Two Best Stocks to Invest in for 2026: Riding the AI and Semiconductors Wave

The investment landscape in 2026 is being shaped by two dominant secular trends: artificial intelligence and semiconductor manufacturing. For investors seeking the best stocks to invest in right now, understanding how companies are positioned within these sectors is crucial. Global AI spending is projected to reach $2.5 trillion in 2026—a 44% jump from 2025—with another 32% increase anticipated in 2027, according to Gartner research. This creates a compelling opportunity to identify companies that can capitalize on this explosive growth trajectory.

The tech-focused Nasdaq Composite has already demonstrated its strength, delivering 111% gains over the past three years compared to the S&P 500’s 74% return. However, the real opportunity for investors looking for best stocks to invest in may lie in two specific companies positioned to benefit disproportionately from AI and semiconductor spending in the coming year.

Applied Materials: Semiconductor Equipment Demand Set to Explode

Applied Materials (NASDAQ: AMAT) represents a prime candidate for investors seeking exposure to semiconductor capital equipment spending. Over the past six months, the company’s shares have surged 72%, reflecting strong market recognition of its potential. Yet beneath this surface-level momentum lies a more compelling fundamental story.

The semiconductor industry is experiencing a critical shortage of both logic and memory chips—a reality underscored by recent earnings from Taiwan Semiconductor Manufacturing (TSMC) and Micron Technology. This supply constraint is driving unprecedented demand for chipmaking equipment. While SEMI, the semiconductor industry association, projects equipment sales will climb to $145 billion in 2026 from $133 billion in 2025, the actual increase could substantially exceed these estimates.

Consider the capital expenditure guidance from key players. TSMC alone plans to boost capex by $13 billion at the midpoint of its 2026 guidance. Micron intends to elevate capex to $20 billion in the current fiscal year, up from just under $14 billion—a $6 billion increase. These commitments suggest that semiconductor equipment spending could expand far more aggressively than industry benchmarks anticipate.

Applied Materials’ fiscal 2025 results (ended October 26) showed revenue climbing 4% to a record $28.4 billion. Though consensus estimates remain cautious about near-term growth, the company appears positioned to surprise to the upside. Trading at roughly 9 times sales—in line with the broader technology sector’s average—Applied Materials has room to command a premium multiple if it outperforms quarterly expectations. For investors hunting for stocks to invest in with asymmetric upside potential, this semiconductor equipment leader merits serious consideration.

SentinelOne: The Cybersecurity Play on Enterprise AI Investment

SentinelOne (NYSE: S) presented investors with a compelling buying opportunity following a challenging 2025. The cybersecurity specialist’s share price declined 32% during the year as the company struggled to meet Wall Street’s quarterly targets. This marks the second consecutive challenging year—the stock fell 19% in 2024 as well. Yet this weakness has created an attractive entry point for contrarian investors.

Currently trading at 4.6 times sales and 38.6 times forward earnings, SentinelOne offers valuation that doesn’t fully reflect the company’s operational momentum. The company is experiencing healthy revenue and earnings expansion, driven by customer adoption of its AI-focused product suite. The $225 million acquisition of Observo AI last year demonstrates management’s commitment to strengthening its threat-detection capabilities within its Singularity platform—an AI-native system designed for real-time threat prediction and response.

During the company’s December earnings call, management highlighted that Singularity is securing substantial new contracts and building a robust revenue pipeline. Recent third-quarter results for fiscal 2026 (ended October 31) showcase this momentum. Revenue increased 23% year-over-year to $259 million, but the more impressive metric was remaining performance obligations (RPO), which surged 35% to $1.3 billion. RPO represents unfulfilled contract value—a leading indicator suggesting SentinelOne is landing business faster than it can deliver it.

This strength is translating into margin expansion. Non-GAAP net income margin improved to 9.6% in the most recent quarter from breakeven in the year-ago period. With the cybersecurity AI market projected to nearly double to $51 billion in 2026 according to Gartner, SentinelOne is positioned to benefit from macro tailwinds combined with its operational execution. Analyst consensus assigns a 12-month median price target of $20.50, implying 48% upside from current trading levels across 39 analysts covering the stock.

Why These Represent the Best Stocks to Invest in Right Now

The case for these two stocks centers on visibility and growth drivers that few other opportunities offer. Applied Materials benefits from deterministic demand—when chip shortages persist, equipment makers see robust order flow. SentinelOne operates in a market inflecting toward AI-native security solutions, a niche where enterprise customers are substantially increasing budgets.

Importantly, both companies trade at reasonable valuations that don’t yet fully embed their growth potential. Applied Materials’ discount to historical multiples provides margin of safety, while SentinelOne’s depressed valuation following a challenging year creates asymmetric risk-reward. For investors seeking the best stocks to invest in as 2026 unfolds, these two companies offer a blend of macro tailwinds, company-specific catalysts, and attractive valuations that justify portfolio consideration.

As AI spending accelerates and semiconductor supply chains normalize, both Applied Materials and SentinelOne are well-positioned to translate industry dynamics into shareholder value creation.