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Investors rotated capital out of artificial intelligence (AI) stocks in early 2026, mainly due to sentiment rather than fundamentals. Concerns around sky-high valuations of AI stocks and surging oil prices pushed many investors toward cyclical sectors like energy and industrials.
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But that shift is already showing signs of fading. The benchmark S&P 500 index and the tech-heavy Nasdaq Composite index have surged nearly 10% and 15%, respectively, in April 2026, driven by stronger earnings and renewed investor interest in AI-related stocks.
Stock valuations increasingly depend on long-term growth expectations. According to Goldman Sachs, about 75% of the S&P 500's equity value is driven by long-term growth assumptions of the constituent stocks.
Against this backdrop, investors may want to focus on companies where AI demand is already visible in revenues and capacity expansion. Here are two stocks that appear attractive now.
Taiwan Semiconductor Manufacturing (NYSE: TSM) has become a crucial player in the AI value chain, with roughly a 72.3% share of the global pure-play foundry market.
However, the broader semiconductor ecosystem is also entering a new phase. According to research firm IDC, the industry is shifting from "Foundry 1.0," which is focused solely on chip manufacturing, to "Foundry 2.0," which includes manufacturing, packaging, and related services. The Foundry 2.0 market is expected to grow around 17% year over year to over $360 billion in 2026, driven mainly by solid AI demand.
TSMC is expanding its manufacturing footprint to capitalize on rising demand for AI graphics processing units (GPUs) and custom chips from companies such as Nvidia, Advanced Micro Devices, and Broadcom. The expansion comes as the supply of advanced nodes and CoWoS (chip-on-wafer-on-substrate packaging used to integrate high-bandwidth memory with AI processors) remains tight. The company has planned for capital spending of $52 billion to $56 billion in 2026, focused on expanding both its advanced chip manufacturing and its packaging capacity.
Tight supply is supporting TSMC's pricing power. Pricing for advanced nodes has increased by more than 5%, while large customers often prebook capacity. The company's technology mix also reflects strong demand, with advanced process technology accounting for roughly 74% of wafer revenue in the first quarter. The 3-nanometer process technology alone contributed about 25% of wafer revenue in the first quarter, while 2-nanometer process technology is expected to ramp up rapidly in the coming months.
TSMC's scale is extending beyond traditional manufacturing and is expected to account for nearly 44% of the broader Foundry 2.0 market in 2026. With strong demand, tight supply, and continued investment in next-generation technologies, TSMC appears to be a smart buy in 2026.
Intel (NASDAQ: INTC) is increasingly becoming a more relevant player in the AI infrastructure space, and its latest financial results reflect that shift. The company's revenues were up 7% year over year to $13.6 billion, while non-GAAP earnings per share of $0.29 beat consensus expectations by nearly $0.28 in the first quarter of fiscal 2026 (ending March 28, 2026).
Demand for Intel's Xeon server central processing units (CPUs) continues to exceed available supply, due to strong AI-driven demand. The company highlighted that CPUs are increasingly acting as the "orchestration layer" and "control plane" for AI workloads, particularly as deployments move beyond training into inference (real-time deployment of AI models). The GPU-to-CPU ratio is also changing, with AI training workloads typically using seven to eight GPUs per CPU, while inference workloads are moving closer to three to four GPUs per CPU.
These dynamics have played a crucial role in driving Intel's data center revenues to $5.1 billion in the first quarter, up 22% year over year. The company's overall AI-driven business accounted for roughly 60% of its first-quarter revenues and grew 40% year over year.
Intel is also expanding its presence in non-CPU areas of the AI technology stack. The company's advanced packaging business is emerging as a key growth opportunity, with customer demand already running into billions of dollars per year. Intel's custom silicon business is already generating over $1 billion in revenue run rate. Intel is also improving execution, working to increase the supply of its server CPUs and overall chip output as demand continues to exceed available capacity.
As AI adoption shifts toward inference and Intel strengthens its presence across the AI stack, the company's stock may continue to soar in the coming months.
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Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Broadcom, Goldman Sachs Group, and Intel. The Motley Fool has a disclosure policy.
Prediction: The Great Rotation Will End Before 2026 Does. These Are the Best Artificial Intelligence (AI) Growth Stocks to Own When It Does. was originally published by The Motley Fool