5 Best Semiconductor Stocks to Buy for Q2 2024 – Invezz
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Demand from technology has resulted in the semiconductor industry experiencing a boom in recent years. With technology now integral to the world, companies that develop semiconductors are in demand. Our investment experts have investigated the market and selected five of the top semiconductor stocks for the year ahead.
You can find our experts’ selections listed below. You can find their name and ticker symbol and if you want to invest right away, just click the buttons. Alternatively, keep scrolling if you want to know why each has made our list.
Taiwan Semiconductor Manufacturing Company is the largest semiconductor manufacturing company in the world It specialises in manufacturing for other companies rather than producing semiconductor chips for itself. This business model allows TSMC to work with a wide range of clients and diversify its revenue streams.
TSMS’s business has been growing rapidly in the past few years, helped by the ongoing demand for artificial intelligence products. Its revenue soared from over $35.7 billion in 2019 billion to over $70.4 billion in 2023 and analysts expect that this growth will continue.
TSMC has also become a highly profitable company as its net income soared from $11.8 billion in 2019 to over $27 billion in 2023.
TSMC is also expanding its presence in the United States by opening two new factories in Arizona and investing $40 billion in the region. This move demonstrates the company’s commitment to growing its operations in one of the world’s largest and most important markets. It also positions TSMC well to take advantage of the rising demand for microchip technology in the US and globally.
The biggest risk for TSMC is that it has become one of the most geopolitical companies in the world. It could come at risk if China decides to invade Taiwan. It is also unclear whether its global investments, especially in the US, will pay off.
Nvidia Corp. is a technology company that designs and manufactures chips and graphics processing units for various industries, including gaming, data centres, artificial intelligence, personal computers, autonomous driving, and even cryptocurrency mining. This diversification across multiple industries positions the company to benefit from numerous growth drivers and reduce the risk of being exposed to any one market over the next decade.
Nvidia has become one of the most important companies globally with a market cap of over $3 trillion. Its revenue has jumped from over $10.9 billion in 2019 to over $60 billion in 2023. Most recently, its quarterly revenue jumped to over $24 billion, helped by the robust growth of artificial intelligence.
Nvidia is well-known for its advanced GPUs, which are used to power the biggest data centers in the world. The rising demand for AI has led to an unprecedented for its GPUs, which explains why its revenue is booming.
The company has more room to grow as the digitizing craze intensifies. However, there are concerns about its valuation since it is trading at a forward PE ratio of over 40. As we saw with Tesla, even the fastest companies tend to hit a growth barrier over time.
ASML is one of the most important semiconductor companies in the world. While it is not a well-known brand, it is a familiar name in the technology company.
ASML manufactures the huge machines that companies like TSMC and Global Foundries use to create semiconductors. Its machines are highly expensive, with a unit costing over $300 million.
Its main advantage is that it is a near monopoly and attempts to recreate its products have largely hit a barrier. Over the years, its total revenue has jumped from over $13.2 billion in 2019 to over $30.4 billion in 2023.
ASML is also a highly profitable company whose net income has jumped from $2.9 billion to over $8.6 billion. Therefore, this is a good name because of its role in the semiconductor industry. However, the challenge is that geopolitics have affected how it does business in China, the biggest chip market.
Advanced Micro Devices (AMD) is a technology company that has been operating for many years, but it has only recently become a major player in the semiconductor space. It works across four business segments: PCs, data centres, gaming, and embedded. This diversification across multiple industries positions the company to benefit from multiple growth drivers and reduce the risk of being exposed to any one market.
In recent years, AMD has made significant investments to expand its operations and increase its market share. One example of this is the acquisition of Xilinx for nearly $50 billion in 2022. This acquisition expands AMD’s presence in the embedded semiconductor sector and means the company could take advantage of the rising demand for these products.
AMD has also been investing in new technologies, such as developing its Ryzen processors, which are well-regarded by the gaming and PC communities. This has helped the company to increase its market share in these segments, which could drive future growth. The company’s revenue has jumped from $6.7 billion in 2018 to over $22.6 billion in 2023 and this growth trend will continue.
Applied Materials is a good option for investors wanting a different approach to the industry. It doesn’t make semiconductors like other companies on our list, but it makes semiconductor manufacturing equipment used to develop chips and sells them to other businesses within the industry. As the semiconductor industry grows, AMAT can capitalise on more producers needing equipment.
Applied Materials manufactures its products in three key categories: semiconductor systems, applied global services, and display and adjacent markets. Some of its top markets are epitaxy, ion implant, rapid thermal processing, and chemical vapor deposition. It also makes atomic layer deposition and chemical mechanical planarization. All these products are used by companies that manufacture semiconductors.
Applied Materials has seen its revenue grow over the years. It has moved from over $14.6 billion in 2019 to over $26 billion in 2023. Its net income has soared from over $2.7 billion in 2019 to over $6.8 billion in 2023.
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A semiconductor stock is a publicly traded company involved in the semiconductor industry. Semiconductors are materials used to create electronic devices and integrated circuits found in various products such as smartphones, computers, and cars.
Semiconductor companies design and produce the advanced chips and microprocessors that power technologies we use every day – from mobile devices and appliances to vehicles, data centres, and cutting-edge innovations like artificial intelligence. Leading chip manufacturers include Intel, Taiwan Semiconductor, Qualcomm, Nvidia, and Advanced Micro Devices Inc.
The semiconductor industry has experienced significant growth in recent decades with the increase of connected devices and the need for computing power. Semiconductor stocks can provide exposure to key long term trends like 5G networks, the Internet of Things, cloud computing, data analytics, and advanced mobility.
Evaluating semiconductor companies’ financial strength, product pipeline, and competitive advantages allows you to identify stocks poised for growth. Semiconductor index funds and ETFs provide diversified exposure to this essential tech industry.
Semiconductor stocks are a good investment for several reasons. Firstly, the semiconductor industry is rapidly growing with various applications, from consumer electronics to automobiles and industrial automation. As technology advances and more industries rely on semiconductors, the demand for these materials and the companies that produce them will likely increase.
Secondly, semiconductor companies often have strong financials, including high-profit margins and equity returns. Many companies within the industry are leaders in their field, with solid research and development capabilities, which can lead to developing new and innovative products and increasing their market competitiveness.
Due to these factors, many semiconductor companies have historically provided strong returns for investors and are considered excellent long-term investment opportunities. Whatever you decide to do, it’s a good idea to keep up to date with the latest developments and news in the semiconductor industry, which you can do on the links below.
Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.
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