The Top 3 Semiconductor Stocks to Buy in April 2024 – InvestorPlace
These top semiconductor stocks dominate their respective niches
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Everyone knows today’s top semiconductor stocks like Nvidia (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD) and Taiwan Semiconductor (NYSE:TSM), which often attract the bulk of investor attention and capital.
However, lesser-known top semiconductor stocks are lurking in the market, ready to skyrocket as artificial intelligence and machine learning tech evolve and trends accelerate. To find these overlooked semiconductor stocks, keep two criteria in mind. First, identify top semiconductor companies specializing in niche components critical to specific applications, such as parts for electric vehicle assemblies. These firms often dominate their market niches and maintain strong positions.
For other top semiconductor stocks, look to those supporting the wider industry and not directly competing with the likes of Nvidia or AMD — find semiconductor stocks providing key peripheral services to those companies, and you’ll find semiconductor stocks set to explode no matter which specific company dominates the industry.
Infineon’s (OTCMKTS:IFNNY) top semiconductor stock status lays at the intersection of multiple emerging automotive trends: EVs and increasingly complex internal “dashboard tech” in cars of all types. The European semiconductor manufacturer embeds its components in various vehicle systems, including infotainment platforms and Bluetooth interfaces.
Furthermore, Infineon’s chips are essential to less visible — but key — EV functions like anti-lock braking systems, airbag deployment mechanisms and air conditioning. As EVs continue to advance into lower-end market segments due to decreasing research and development costs, the demand for these semiconductors is set to surge. Infineon stands out as one of the key players poised to benefit from this increasing demand.
Likewise, the outlook for EV infotainment systems is particularly promising. A research report projects a 38% annual growth in demand for these systems through 2030. As vehicle interiors become more complex, the need for semiconductors intensifies. Infineon’s strategic position in this specific area of the EV value chain distinguishes it from other semiconductor manufacturers offering more general-purpose solutions.
Skyworks Solutions (NASDAQ:SWKS) is a niche semiconductor stock that’s a top operator in the 5G and wireless data sector. It provides essential semiconductors for the wireless ecosystem in cell towers and individual user phones. Skyworks’ specific benefits lay in globally expanding 5G network connectivity, as its components are crucial for band switching and other functionalities associated with 5G.
While Skyworks enjoys a broad market opportunity, it is significantly reliant on Apple (NASDAQ:AAPL), which accounted for nearly 60% of its 2022 revenue. Although such dependence on a single customer poses risks, the burgeoning 5G market, expected to grow at an annual rate of 32% through 2030, gives Skyworks a decent safety net backstop.
Institutional investors, who own 84% of Skyworks shares, reinforce the stock’s strength. Following the smart money — large institutional investors — is often a wise strategy for niche tech like semiconductor stocks. With 19 institutions holding more than half of the company’s shares, their substantial commitment signals a strong belief in Skyworks’ potential, suggesting something uniquely compelling about this semiconductor stock.
Onto Innovation (NYSE:ONTO) is a top semiconductor support stock rather than a chipmaker, but it is indispensable to the industry and still benefits from wider sector trends. Its year-to-date 26% climb signals strong momentum, but that’s just part of the company’s growth trajectory.
In August last year, Onto announced a significant $100 million deal for its Dragonfly inspection system. This system is crucial for detecting flaws in semiconductors made by third parties, addressing a vital need for major companies like Nvidia. Onto’s robust position in the semiconductor supply chain stems from the essential nature of its inspection services, positioning it as a key service provider to a wide range of semiconductor clients. Likewise, Onto’s customer base broadens as semiconductors become increasingly fundamental to all electronic systems.
With AI demand continuing largely unabated, the GPUs and related technology market is projected to expand to $25.5 billion by 2030. Onto is ideally placed to benefit from this growth as the semiconductor sector races to advance, regardless of which companies emerge as leaders in the competitive market.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Jeremy Flint, an MBA graduate and skilled finance writer, excels in content strategy for wealth managers and investment funds. Passionate about simplifying complex market concepts, he focuses on fixed-income investing, alternative investments, economic analysis, and the oil, gas, and utilities sectors. Jeremy’s work can also be found at www.jeremyflint.work.
Technology, Semiconductor
Article printed from InvestorPlace Media, https://investorplace.com/2024/04/the-top-3-semiconductor-stocks-to-buy-in-april-2024/.
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