The semiconductor industry stands on the precipice of a milestone that seemed almost unimaginable just a decade ago. According to a new research note from Bank of America analyst Vivek Arya, global chip sales are poised to surge 30% year-over-year in 2026, finally pushing the sector past the historic $1 trillion annual sales mark.

It's a number that underscores just how thoroughly artificial intelligence has reshaped the technology landscape—and how much further the transformation has to go.

The Midpoint of a Decade-Long Revolution

While AI skeptics have pointed to eye-popping valuations as a reason to flee semiconductor stocks, Arya sees the industry at what he calls the "midpoint" of a decade-long transformation. The implication is clear: the AI-driven chip boom isn't cooling off anytime soon.

"We are still in the early innings of the AI infrastructure buildout," the BofA note stated. "The hyperscalers have barely scratched the surface of what's needed to power next-generation AI applications."

The numbers back up that thesis. Goldman Sachs estimates that hyperscalers including Microsoft, Alphabet, Amazon, and Meta Platforms will spend roughly $500 billion on AI capital expenditures in 2026 alone—a figure that dwarfs what these companies spent on cloud infrastructure during the entire previous decade.

Nvidia: The Undisputed Leader

At the center of this $1 trillion surge sits Nvidia, the company that has become synonymous with AI computing. Bank of America estimates Nvidia's revenue for fiscal year 2026 will reach $212.83 billion, with non-GAAP earnings per share of $4.66.

Those projections have only been revised higher in recent weeks. The company's earnings growth is expected to accelerate to 59%, landing at $7.46 per share. Behind those numbers lies a staggering order backlog of approximately $500 billion for its Blackwell, Rubin, and accompanying networking products, with an estimated $300 billion expected to be recognized during 2026.

"The Vera Rubin chip line launch will be the defining moment of 2026," Arya wrote. "If the chips bring the promised performance and efficiency uplift, it will reinforce Nvidia's supremacy in the AI compute market."

— Vivek Arya, Bank of America

Wedbush's Dan Ives echoed the bullish sentiment, setting a $250 base-case target for Nvidia by the end of 2026—representing a 33% gain from current prices. Of 48 analysts covering the stock, 43 rate it a Buy or Strong Buy, with price targets ranging from $100 to $250.

AMD's Challenger Narrative

Nvidia won't dominate unchallenged. AMD is on track to launch its significantly upgraded MI400 series of data center GPUs and rack-scale AI solutions in 2026. The company has already inked partnerships with OpenAI, Oracle, and the Department of Energy—relationships that could start contributing significantly to its top line.

Analysts expect a 31% spike in AMD's revenue next year. Assuming the company manages to increase its revenue by 35%, sales could jump to $46 billion from this year's estimated $34 billion. AMD recently forecast that it would grow its data center revenue at a 60% compound annual rate over the next five years.

Perhaps most compelling for value-oriented investors: AMD trades at 11 times sales, a massive discount to Nvidia's sales multiple of 23.

The Six Stocks Leading the Charge

Bank of America identified six stocks it expects to lead the $1 trillion chip surge:

  • Nvidia — The undisputed AI compute leader with $500 billion in backlog
  • Broadcom — Custom silicon and networking plays for hyperscalers
  • AMD — The direct challenger with strong data center growth
  • Marvell Technology — Data infrastructure and 5G connectivity
  • Qualcomm — Mobile and IoT chipsets with AI capabilities
  • Intel — Foundry services and PC market recovery

BofA pointed to free cash flow—projected to hit half a trillion dollars over the next three years across the industry—and a valuation that remains "incredibly cheap" when adjusted for growth.

Risks to the Thesis

The path to $1 trillion isn't without obstacles. Key risks include rising competition from custom application-specific integrated circuits (ASICs) from Broadcom, regulatory headwinds in China, and global supply chain constraints that continue to plague the industry.

Reuters flagged the risk that if companies pull back capital expenditures or if markets lose confidence in AI returns, 2026 could look far flatter than today's targets suggest. The AI narrative has powered chip stocks to extraordinary valuations, and any crack in that story could trigger significant repricing.

Still, for investors who believe the AI infrastructure buildout is only at its midpoint, the semiconductor industry's march toward $1 trillion represents one of the most compelling opportunities in financial markets.

The Bottom Line

The semiconductor industry's potential ascent past $1 trillion in 2026 isn't just a round number—it's a testament to how thoroughly AI has transformed the technology sector. From hyperscaler data centers to edge computing devices, chips have become the new oil of the digital economy.

For investors, the question isn't whether the AI boom is real—it's whether valuations have already priced in the best of it. With analysts like Arya calling the current moment the "midpoint" of a decade-long shift, the answer may be that there's still significant runway ahead.