For many semiconductor stocks to buy the two “A” markets, artificial intelligence ( ) and autos, will be extremely positive catalysts in the years and months ahead. Even Keybanc Capital analyst John Vinh, who’s rather bearish overall on the the chip space, admitted recently that AI would probably be “a shining pillar of strength” for the sector. And when it comes to autos, Vinh noted that the demand for semiconductors from the space is “healthy,” Benzinga reported.
Also noteworthy is that the analyst is upbeat on industrial companies’ demand for chips. While Vinh is bearish on the consumer electronics sector, research firm Canalys believes that the demand for smartphones is starting to recover. Consequently, I continue to believe that the demand for other consumer electronics is also increasing. Here are three semiconductor stocks to buy to exploit these positive trends and make huge profits.
ASML (NASDAQ:ASML) develops lithography systems that are utilized to make semiconductors. Unsurprisingly, given the powerful demand for chips for use in developing AI and enhancing autos, the company reported very strong second-quarter results on July 19.
Specifically, the company’s net profit soared an impressive 35% versus the same period a year earlier to 1.9 billion euros, while its sales jumped 28% year-over-year to 6.9 billion euros. The company expects its sales to jump a very impressive 30% this year, driven by strong demand for its products. ASML indicated that it could benefit from even stronger demand as the consumer electronics market recovers.
Moreover, CEO Peter Wennick reported that the wave of demand for ASML’s products are being triggered by the advent of AI is just beginning, and he thinks that trend will likely intensify in 2024.
Monolithic Power (MPWR)
Monolithic Power (NASDAQ:MPWR) develops and markets power chips that serve the storage, auto and industrial markets.
As I noted in the introduction to this column, the auto and industrial sectors are thriving. And I believe that the demand for energy and data storage, triggered primarily by the rapidly increasing use of renewable energy and the proliferation of data centers, will also be very strong going forward. As a result, I view MPWR as one of the best semiconductor stocks to buy at this point.
Also bullish for MPWR stock is the fact that the Arizona State Retirement System recently bought a significant $6.5 million of MPWR stock, bringing its total holding of the name to nearly 13,000 shares.
NXP Semiconductors (NXPI)
For many months, I’ve been bullish on NXP Semiconductors (NASDAQ:NXPI), citing its high leverage to the auto market.
As a result, it was gratifying for me, while doing research for this article, to find that investment bank Needham was very upbeat on the stock too. Needham analyst Rajvindra Gill is positive on what he called NXPI’s “strong positioning in automotive.” But, Gill is also bullish on NXPI because of its leverage to the proliferation of 5G technologies.
Investor’s Business Daily gives NXPI stock an Accumulation/Distribution grade of A-, indicating that institutions have been buying a great deal of the shares in the previous 13 weeks.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.