Semiconductor stocks have been on a tear in the last year, and that momentum is set to continue in 2024. The burgeoning semiconductor industry stands at the forefront of technological innovation. While artificial intelligence has been a primary driver, there are a number of industries that are in need of advanced semiconductor chips.
During the pandemic there was a widespread, global semiconductor shortage. This shortage extended well into late 2023 and had largely affected the automotive market. Now, with supply chain constraints alleviating, the semiconductor chip boom could see an acceleration in demand for 2024. With a wide range of use cases, the semiconductor industry stands as one of the most important industries in the world.
ASML Holding NV (ASML)
ASML Holding NV (NASDAQ:ASML) is a European semiconductor company headquartered in Veldhoven, Netherlands. The company is about to close off a strong 2023 fiscal year, and the outlook for the next few years looks very promising.
ASML largely benefitted from the rebound of the semiconductor industry in 2023. Demand picked up more than what industry experts were expecting, resulting in strong YOY growth in revenue in EPS. Furthermore, the company recently announced a joint venture with Samsung to invest $760 million in a new advanced fab plant in South Korea. This could prove to be a huge strategic move, as demand for electronics continues to accelerate over the next decade.
CEO, Peter Wennink expects the company to grow top line revenue by 30% in the 2023 fiscal year. Gross margins are expected to be in line with the 2022 fiscal year. While the 2024 fiscal year may very well be a transition year, the company still has enormous untapped potential that long term investors cannot ignore.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON) is an under-the-radar semiconductor stock that investors should pay close attention to in 2024. They stand as a pure play bet on the growing market.
The 2023 fiscal year was definitely a year of slower growth for the company. This is because the company’s advanced semiconductor chips are largely tied to the automotive, EV and energy storage market. These emerging industries saw a major slowdown in 2023, but growth is still expected to accelerate over the next decade.
The stock appears to be cheap right now, and investors can be bullish. The company recently announced the expansion of their new manufacturing facility in Bucheron, South Korea. It is expected to produce more than 1 million wafers per year. Additionally, analyst’s project FY23 EPS in the $5.09 – $5.37 range, reflecting approximately 20% YOY growth. With a forward P/E of 15.27, ON Semi is one of the best multibagger semiconductor stocks to buy.
Applied Materials (AMAT)
Applied Materials (NASDAQ:AMAT) is a frontrunner for one of the best semiconductor stocks to buy in January 2024. The stock has been on a tear in the last month, as investors turn bullish on the semiconductor equipment market.
Last year was definitely a much slower year for the semiconductor equipment market. Spending in the wafer fabrication equipment market saw double digit declines. While the company did manage to report YOY growth, it was relatively modest to say the least. Revenue and GAAP EPS rising 3% and 9% in the 2023 fiscal year. This was far below many of the big players in the semiconductor equipment industry.
However, the long term outlook on the company looks strong, making AMAT a compelling buy. Tailwinds in artificial intelligence have Wall Street excited about the company’s future. More recently, Applied Materials announced a partnership with Google (NASDAQ:GOOG, NASDAQ:GOOGL) to advance next-generation AR computing platforms. AMAT seems relatively cheap, making it a strong growth candidate as the semiconductor equipment market rebounds in 2024.
On the date of publication, Terel Miles 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.
