Prediction: This AI Stock Will Be the Most Surprising Winner of 2026

Predicting winners in the artificial intelligence (AI) realm over the past few years has been fairly easy. Just pick a stock associated with AI, and chances are you'll have beaten the market. While that's a vast oversimplification, choosing a stock like Nvidia (NASDAQ: NVDA) or Palantir Technologies, both recognized leaders in their realm, has resulted in market-beating stock returns.

However, after so many years of great returns, it seems like Nvidia is trending toward being less of a success in 2026, especially with tensor processing units (TPUs) from Alphabet emerging as a potential alternative to Nvidia's graphics processing units (GPUs). Nvidia has an iron grip on the AI computing market, and if that slips, the stock could be in trouble. On the flip side, if this doesn't happen, Nvidia could roar to new heights in 2026 on the backs of increased AI spending.

I think the fears of Nvidia losing its dominance are overblown, and Nvidia could once again be one of the best AI stocks to own in 2026. This would certainly be a surprise to some investors, but it could yield great results if it pans out.

Image source: Getty Images.

Nvidia's GPUs have been the go-to unit for some time

Since 2023, when most AI spending began, Nvidia GPUs have established themselves as the leading option in the market. Their combination of leading hardware and support software was unmatched, and thrived in a world when AI models were being trained and improved upon at a rapid pace.

However, the pace of innovation has slowed, and many AI hyperscalers are shifting their focus toward computing units more suited for inference. Inference occurs when a pre-trained AI model is prompted with a question, and it doesn't require nearly the amount of computing power as training a unit does.

Nvidia's GPUs can run inference, but their competitive edge isn't as strong in this area. This could open the door for computing units from competitors to take market share from Nvidia.

One option is custom AI accelerator units from Broadcom, such as the TPUs that it collaborated with Alphabet to make. Originally, Alphabet only used these units internally or made them available for rent through its cloud computing service, but recent news has noted that Meta Platforms may be purchasing some for its own use.

Meta Platforms is one of Nvidia's largest clients, and losing out on business originally intended for its GPUs would be a significant loss. However, what investors are missing is that Meta likely isn't completely replacing Nvidia GPUs; it's supplementing them with TPUs.

During Nvidia's last earnings announcement, CEO Jensen Huang noted that they are sold out of cloud GPUs, and if Meta couldn't get the amount they wanted from Nvidia, they may have decided to look elsewhere for the computing capacity they need. If that's the case, the fears of Nvidia's dominance slipping are unfounded, and the sale price the market is offering investors is an absolute bargain.

Nvidia's stock is trading at levels not seen for some time

As we near the end of 2025, using 2026 earnings projections to value the stock is wise. This can also give us some historical context to see where a stock was trading last year. For Nvidia, 24 times next year's forward earnings is cheaper than where it entered 2025, but still more expensive than where it entered 2024.

NVDA PE Ratio (Forward 1y) data by YCharts

Of course, this assumes that Nvidia grows at the pace Wall Street expects. For next year, the average Wall Street analyst expects 48% growth. That's a ton of growth, and if Nvidia loses its competitive edge in the computing unit industry, that growth may not be possible. I think it's likely that Nvidia meets or exceeds this level, and if Nvidia can continue growing beyond 2026, it's a no-brainer investment.

Nvidia expects annual global data center capital expenditures to reach $3 trillion to $4 trillion by 2030. If their projection comes true and Nvidia maintains its market position, it will still be one of the best stocks to own over the next few years. I think Nvidia will continue to surprise in 2026 and beyond, making it a great buy now.

Keithen Drury has positions in Alphabet, Broadcom, Meta Platforms, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, Nvidia, and Palantir Technologies. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.