A few decades ago, the microchip industry seemed like a niche manufacturing sector. Most perceptions of microchips and semiconductors included large desktop computers and defense communications projects. Today, nearly everything needs a computer to work as the world becomes increasingly interconnected. Cars, watches, phones and even TVs all have some level of computing powering them.
For the manufacturers of computers and their components, this means an endless stream of new orders and innovations to pursue. Though semiconductors rarely make popular headlines, the shift in political goals across East Asia has brought them into the spotlight. Rising tensions regarding the future of Taiwan and continuously strained supply lines have renewed commitments to returning manufacturing to the U.S.
Furthermore, with increasing levels of development around the world, over five billion people rely on computers. Thanks to this global importance and investment in semiconductors, these are three 2024 chip stocks to keep an eye on.
Analog Devices (ADI)
Though not the flashiest of names in the microchip industry, Analog Devices’ (NASDAQ:ADI) importance makes it worth knowing about. Critical to over 100,000 customers, from defense to commercial, ADI’s position in the market provides its stock stability.
By offering a diverse lineup of products and continuously expanding through acquisitions, ADI has become a jack of all trades. Now, with ADI’s recent investment into a new Oregon-based factory, the company sits in a perfect position to expand profits. Despite being more costly, the benefits of domestic production cannot be overstated when considering ADI’s defense customers.
As the need for military production supply lines ramps up, ADI’s new facility provides shorter lead times and greater security. It also allows Analog Devices to capitalize on federal grants intended to financially sweeten the deal. Take into consideration lagging production investments from competitors, and it makes sense why this stable stock sits at “moderate buy“.
Advanced Micro Devices (AMD)
Advanced Micro Devices‘ (NASDAQ:AMD) stock soared over 145% in the past year, thanks to the introduction of training AI with graphics processing units (GPUs). This increase in demand catapulted AMD’s GPU sales, but the company continues to focus on its standard processors as well.
By offering a spectrum of processors, AMD aims to serve every computer manufacturer’s needs. From low-performance, energy-efficient chips, to monstrously fast, high-speed processors, AMD has a product for every price point. This same philosophy extends to its GPU prices, with its prices consistently coming in below the competition’s.
AMD’s push for a wider product portfolio also includes specializing its general processors for more dedicated tasks. Take for example the newly unveiled Radeon RX 7600 XT graphics card from AMD. Priced at only $350, the 7600 XT offers an affordable entry into the world of gaming and training AI. Innovations like this and a push towards providing accessible technology, make AMD a “strong buy” among 2024 chip stocks.
Taiwan Semiconductor (TSM)
Finally, when discussing chip stocks, it is impossible to not mention Taiwan Semiconductor (NYSE:TSM). Though headquartered in Taiwan, its aggressive expansion in the U.S. comes as the demand for reliable electronics supply chains soars. Its new facility in Arizona and newly announced second facility in Japan generously expand production capacity.
These expansions come while demand for semiconductors remains at an all-time high post-pandemic. Further concerns over potential conflicts between China and Taiwan also underscore the need for TSMC to increase production abroad. This provides Taiwan Semiconductor with the ability to fulfill backlogged orders and continue to operate, should any issues arise.
New facilities also mean improved manufacturing equipment and efficiency, further improving TSMC’s position. Such investments in long-term capacity lead to 2024 chip stock stability for TSMC, while also increasing the potential for success. Low pricing along with significant upside potential maintains Taiwan Semiconductor as a “strong buy” this year.
On the date of publication, Viktor Zarev did not have (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.
