Artificial intelligence (AI) stocks have regained their mojo after a tepid start to 2026. The Global X Artificial Intelligence & Technology ETF, an exchange-traded fund that invests in companies using AI in their operations and selling related hardware and software solutions, has appreciated by 19% so far this year.
It is worth noting that the ETF has jumped by 28% since the beginning of April, outpacing the S&P 500‘s 12% gain over the same period. It is easy to see why AI stocks are rallying once again. Major hyperscalers and AI companies continue to invest heavily in AI data centers to meet the booming demand for AI software solutions.
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Companies such as Palantir Technologies and Anthropic are witnessing remarkable demand for their software solutions that help customers unlock major productivity gains. So, it is easy to see why there are no signs of a slowdown in AI data center investments. The good part is that the huge backlogs of AI software providers and the shortage of critical components should ensure that companies continue to invest billions of dollars to meet the heavy compute demand.
As a result, buying shares of Lam Research(NASDAQ: LRCX) could turn out to be one of the smartest moves in 2026. Let’s look at the reasons why this semiconductor stock may be the only one you need to invest in to capitalize on the AI supercycle.
Lam Research is one of the best ways to capitalize on AI’s growth
The growing demand for AI compute explains the heavy demand for various types of chips, including graphics processing units (GPUs), server processors, custom AI processors, and memory. Companies designing and manufacturing these chips are expecting terrific sales growth.
Broadcom, for instance, is expecting a 5x increase in its AI chip revenue in just two years. Nvidia estimates it can sell a whopping $1 trillion worth of data center AI chips in 2026 and 2027. Meanwhile, memory manufacturers are scrambling to increase supply to address the huge shortage of memory chips.
All this explains why there is terrific demand for wafer and fabrication equipment (WFE) that’s needed to manufacture chips. This is great news for Lam Research, which designs and manufactures semiconductor manufacturing equipment for chipmakers, foundries, and memory companies. The company recently increased its 2026 WFE spending forecast to $140 billion from an earlier estimate of $135 billion.
However, that seems to be a conservative estimate. Market research firm Counterpoint Research is estimating an 11% increase in WFE spending this year to $159 billion. More importantly, the market is expected to keep growing until the end of the decade, with research firm Yole Group estimating that WFE spending could reach $184 billion in 2030.
Lam Research is already benefiting from this strong spending, clocking healthy revenue and earnings growth.
The good news for investors is that Lam Research’s growth is poised to accelerate. Consensus estimates are projecting a 26% increase in its revenue in the current fiscal year to $23.2 billion, followed by a bigger jump of 31% in the next one. Even better, Lam’s improving top-line growth will boost its earnings growth.
The secular growth opportunity in the semiconductor market should ensure that Lam continues to sustain solid growth beyond the next three fiscal years.
The stock could deliver solid long-term gains
It won’t be surprising to see the WFE market clocking faster-than-expected growth through the end of the decade. That’s because the global semiconductor market’s revenue could increase at a compound annual growth rate (CAGR) of 20% through 2030, with the industry clocking more than $2 trillion in annual revenue after four years, according to Bank of America.
This should create the need for more semiconductor manufacturing equipment that Lam sells. So, there is a good chance Lam’s earnings will grow in double digits beyond the current and next two fiscal years. Assuming it can clock even 15% earnings growth in fiscal 2029 and 2030, its earnings per share could reach $12.63 at the end of the forecast period (using fiscal 2028’s projected earnings of $9.53 per share as the base).
If Lam trades at 36.5 times earnings at that time, in line with the tech-laden Nasdaq-100 index’s earnings multiple, its stock price could jump to $461 in about four years. That’s a potential upside of 65%, which means that it isn’t too late for investors to buy this tech stock following a 62% spike in its stock price so far this year, as it can easily soar higher thanks to the semiconductor market’s growth.
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Bank of America is an advertising partner of Motley Fool Money. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Broadcom, Lam Research, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.
