Best Semiconductor Investments & ETFs for 2024 The Motley Fool

This is a very high concentration of risk but is assuaged by the demand for AI chips, likely from Apple or Nvidia, whose appetite seems inexorable. The risk with TSMC is whether or not it is financially strong enough to keep up with demand. The $53 billion federal allocation made available by the CHIPS and Science Act is large. But if just one semiconductor company with the AI market squarely in its sights is spending twice as much, the need to bring the U.S. semiconductor market into a more competitive position is much larger than the current federal commitment. When considering the best semiconductor stocks, there’s Nvidia and then there’s everyone else.

Imagine an AI company so groundbreaking, so far ahead of the curve, that even if its stock price quadrupled today, it would still be considered ridiculously cheap. From driverless cars to medical breakthroughs, AI is on the cusp of a global explosion, and savvy investors stand to reap the rewards. Navitas Semiconductor (NVTS Quick QuoteNVTS – Free Report) shares have plunged 77.9% year to date (YTD), underperforming the broader Zacks Computer and Technology sector’s return of 25.7%. Although TSMC’s P/E multiple has increased over the course of 2024, it’s still below Nvidia’s at the time of this writing. This indicates TSMC stock is a better value compared to its semiconductor compatriot.

What are semiconductor stocks?

Lastly, with its diversified approach towards computing, IoT and AI, Intel is strategically moving to regain its leadership position in the semiconductor industry. Each company’s position within the industry, technological advancements and growth prospects in emerging sectors such as AI, IoT and 5G technologies were also evaluated. This involved examining market trends, regulatory impacts and competitive landscapes to pinpoint companies with a strategic edge for long-term growth.

Company Overview

Micron Technology stands out as one of the best semiconductor stocks for 2024, poised to capitalize on several key industry trends. As digital transformation accelerates globally, the demand for memory and storage solutions is skyrocketing, driven by technological advancements such as artificial intelligence, 5G, cloud computing, and the IoT. Micron is well-positioned to meet this surging demand with its leading-edge DRAM and NAND technologies. NVTS’ leadership in GaN and SiC technologies is a cornerstone of its growth strategy. The increasing investment in AI-driven infrastructure is set to boost demand for the company’s advanced chips. In the EV space, Navitas Semiconductor’s technology is well-suited to support the electrification trends in the automotive and industrial sectors, ensuring a solid growth trajectory in the coming years.

Analysts expect its revenue and earnings to grow another 32% and 41%, respectively, this year as it profits from surging demand for new chips. Our research team has identified a hidden gem – an AI company with cutting-edge technology, massive potential, and a current stock price that screams opportunity. Nvidia was a trailblazer in accelerated computing, starting with the introduction of its graphics processing unit (GPU) back in 1999. Now, it dominates the market for the technology it helped to pioneer with an 80% market share in GPUs by some estimates. “Lattice benefits from its solutions for new PC designs, which run on successfully outsource software development low-power FPGAs and provide customers with accelerated AI experiences, extended battery life and collaborative conferencing experiences,” Boughedda adds. Fortunes have been made betting on the future of the semiconductor industry, but it can also be a tricky one.

Top 20 Best-Performing Stocks: November 2024

• Plus, some established players in the semiconductor space provide dividends, adding an income component to the growth prospects.
• These ETFs expose investors to numerous parts of the semiconductor industry and can pad one stock’s downside with another’s gains.
• For the five years ended 2023, total earnings are up nearly threefold, sales per American depositary receipt (or ADR, which TSMC trades in on U.S. markets) have doubled, and the dividend is up 37%.

Investors considering whether now is the time to hop on the bandwagon should keep in mind that with a trailing 12-month price-to-earnings (P/E) ratio of 70 times, NVDA is priced for perfection. One noteworthy item on the income statement is the decrease in research and development, from 6.3% of sales in fiscal 2021 to 4.3% in fiscal 2023. By comparison, however, Taiwan Semiconductor spent 8% of revenue on R&D in 2023 and Nvidia spent more than 14% of revenue on R&D. It’s hard to know how management sees the landscape, whether they are giddy or whether they are terrified. But the high utilization of cash indicates confidence in their fiscal 2024 forecast which calls for revenue of $50 billion and an EBITDA (earnings before interest, taxes, depreciation and amortization) margin of 60%. The growth comes from the acquisition of VMware, and of course, AI-related growth.

In fact, industry research firm International Data Corporation has predicted a long-anticipated return to growth for the semiconductor industry this year after raising its sales forecasts in November 2023. ASML will launch even more advanced EUV systems, called high-NA systems, over the next few years to manufacture 3nm and 2nm chips between 2022 and 2025. That roadmap directly aligns with TSMC’s, and it will enable ASML to remain one of the industry’s most important equipment makers for the foreseeable future. TSMC’s revenue and earnings rose 25% and 50%, respectively, last year as those orders flooded in. Analysts expect its revenue and earnings to grow 20% and 17%, respectively, this year, even as it boosts its capex by up to 63% to maintain its lead in the “process race” to create ever-smaller chips.

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Best Semiconductor Penny Stocks To Invest In Right Now

TSM’s competitive edge is further solidified by its unparalleled manufacturing capabilities, diverse global customer base, and reputation for quality and innovation. This combination of operational excellence and market dominance ensures consistent service demand, reinforcing its market leadership. Some traders use options to speculate on high-volume stocks such as semiconductor stocks. Traders might buy call options if they think a semiconductor stock might rise in price, or they might buy put options if they think it will fall in price. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.

However, what makes UMC worth considering is its huge income potential, with an annual dividend that is approximately five times the S&P 500 right now. But if you’re patient and in it for the long haul, UMC is a semiconductor stock worth considering—particularly with its outlook of 16% revenue growth in the next fiscal year. Speaking of “fabless” chipmakers, Qualcomm fxtm broker reviews predominantly relies on third parties to produce its best-in-class semiconductor products for wireless communications.

A company’s balance sheet that has more cash than debt and low debt relative to operating profit, is a key element to watch. Plenty of cash relative to debt means that a company is well positioned to pay interest and principal payments, even in a pinch. It also xcritical introduction can mean return of excess cash in the form of dividends and stock repurchases. Companies that cannot control their expenses have low profit margins, and companies with high profit margins have a greater ability to reinvest in research and improve their operations. High gross profit, operating profit, and free cash flow generation are also positive indicators that the company is operating efficiently. The VanEck Semiconductor ETF (SMH -1.31%) tracks 25 market cap-weighted, U.S.-listed semiconductor stocks via the MVIS US Listed Semiconductor 25 Index.